National Association of Estate Planners and Councils

September, 2013 Newsletter
Provided by Leimberg Information Services

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FLASH Leimberg Reports On Major Treasury Announcement: Same-Sex Marriage Tax Treatment

EXECUTIVE SUMMARY:

A jointly released ruling today by the U.S. Department of the Treasury and the Internal Revenue Service (IRS) states that:

Same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for ALL federal tax purposes.

The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

FACTS:

The ruling implements federal tax aspects of the June 26th Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.

Today’s ruling provides and assures:

· certainty and clear, coherent tax filing guidance for all legally married same-sex couples nationwide.

· access to benefits, responsibilities and protections under federal tax law.

· legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.

COMMENT:

Same sex couples now will be treated as married for all federal tax purposes, including income and gift and estate taxes.

The ruling applies to all federal tax provisions where marriage is a factor, including:

· filing status,

· claiming personal and dependency exemptions,

· taking the standard deduction,

· employee benefits,

· contributing to an IRA, and

· claiming the earned income tax credit or child tax credit.

All same-sex marriages legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country are covered by the ruling.

CAUTION:   The protections and benefits of this ruling do not apply to:

· registered domestic partnerships,

· civil unions, or

· similar formal relationships recognized under state law.

Legally-married same-sex couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.

Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.  

Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.

IMPORTANT:  STATUTE OF LIMITATIONS:

Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. This means refund claims can still be filed for tax years 2010, 2011, and 2012. Some taxpayers may have special circumstances (such as signing an agreement with the IRS to keep the statute of limitations open) that permit them to file refund claims for tax years 2009 and earlier.  

TO FILE A CLAIM FOR AN INCOME TAX REFUND: 

To file for an income tax refund, use Form 1040X, Amended U.S. Individual Income Tax Return

TO FILE A CLAIM FOR A GIFT OR ESTATE TAX REFUND: 

To file a refund claim for gift or estate taxes, use Form 843, Claim for Refund and Request for Abatement.  

TO FILE AN AMENDED RETURN: 

Information can be found in Tax Topic 308, Amended Returns at http://www.irs.gov/taxtopics/tc308.html or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form.     

FUTURE GUIDANCE: 

Procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses will soon be issued.  

Treasury and IRS will also issue guidance on: 

  • cafeteria plans and
  • how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling.  

Other agencies may provide guidance on other federal programs that they administer that are affected by the Code.  

WHEN EFFECTIVE: 

Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on September 16, 2013. 

Note:  Taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so (as long as the statute of limitations for the earlier period has not expired).

 

HOPE THIS HELPS YOU HELP OTHERS MAKE A POSITIVE DIFFERENCE! 

 

Steve Leimberg

 

CITE AS: 

LISI Estate Planning Newsletter #2136 (August 29, 2013) at http://www.LeimbergServices.com   Copyright 2013 Leimberg Information Services, Inc. (LISI). Reproduction in Any Form or Forwarding to Any Person Prohibited – Without Express Permission.


CITES: 

IRS ANNOUNCEMENT 9/29/2013 

For Revenue Ruling 2013-17, click here

For Frequently Asked Questions, click here

For registered domestic partners who live in community property states, click here for Publication 555, Community Property.

All NAEPC-affiliated estate planning councils are eligible to receive a discounted subscription rate to the Leimberg LISI service. Please see more information about the offering. You may also contact your local council office / board member to find out whether they are offering the service as a member benefit.

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