Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes; Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for 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.
The ruling implements federal tax aspects of the June 26 Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.
Under the ruling, same-sex couples 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.
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling. However, the ruling does 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.
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. As a result, 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.
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 excusable from income.
How to File a Claim for Refund
Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return.
Taxpayers who wish to file a refund claim for gift or estate taxes should file Form 843, Claim for Refund and Request for Abatement. For information on filing an amended return, see Tax Topic 308, Amended Returns, available on IRS.gov, or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form.
Treasury and the IRS intend to issue streamlined 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. Treasury and IRS also intend to issue further guidance on cafeteria plans and on 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.
Revenue Ruling 2013-17, along with updated Frequently Asked Questions for same-sex couples and updated FAQs for registered domestic partners and individuals in civil unions, are available today on IRS.gov. See also Publication 555, Community Property.
Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on Sept. 16, 2013, but 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.
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BREAKING NEWS YOU CAN USE!!!!
Tax Breaks You Should Know
Expiring Tax Breaks You Should Know
Tax Breaks set to expire in 2014
Once again, we have a very interesting income tax filing season on the horizon. By “interesting,” I mean “uncertain.” Without dredging up that whole shutdown thing again, suffice to say there’s plenty of time for political points to once again trump common sense. And every time that happens, the income tax season gets later and more chaotic.
If nothing else happens, there are some existing tax breaks that are schedule to “go away” this coming tax season if Congress sign off on time 2014 tax year or Congress will have to extend them to make them available for 2014 and lawmakers might as well do that for some or even all of the list. But as it stands now, here are the tax breaks you had in 2013 that won’t be there on Jan. 1, 2014.
Mortgage insurance premiums – Private Mortgage Insurance (PMI) is typically purchased by homeowners with less than 20 percent equity in their homes. The premiums were deductible in 2013, but won’t be in ’14. You can still deduct the mortgage interest, but not the PMI.
Classroom expenses for teachers – Qualifying educators can deduct up to $250 for out-of-pocket classroom expenses. Restrictions apply, of course, but this is, not surprisingly, one of the more popular ones on the list. It’s also above-the-line, which means teachers can take the deduction before gross income is figured, and whether or not they itemize. If Congress doesn’t extend this one, look for a lot of failing grades from teachers …
State and local sales tax – Taxpayers in states that do not have a state income tax can currently deduct state and local sales tax from their federal return. (Those who pay state income tax can deduct that amount if they itemize.) The state and local sales tax deduction goes away come Jan. 1.
Electric vehicles – In 2013, you can be eligible for a hefty little tax credit if you buy a qualified electric plug-in vehicle, depending on the size of the battery. Even some leases can qualify. But electric car owners will be stalled in 2014 unless this credit is jump-started.
Energy-efficient home renovations – This tax break isn't new and more than a few taxpayers have used up the $500 total credit since it started in 2006. But qualifying renovations still qualify for the credit for the remainder of 2013. The same goes for large energy efficient appliances. In 2014, though, laundry day may be a little dingy.
Exclusion of cancellation of indebtedness on main residence – Forgiven debt is treated as taxable income. But if your principal residence foreclosed – or sold in a short sale – you can exclude up to $2 million of the forgiven debt from your income. That is, if it happened in 2013, because that little gimme goes away in 2014.
IRA distributions to charity – By contributing an IRA distribution directly to a charity, taxpayers 70-and-a-half and older get around counting the distribution as income. That means they could still qualify for other tax breaks that may have income limits. Next year, though, the tax code could be a little less, well – charitable.
Commuter tax break – This tax break puts train commuters in the same ballpark as car commuters who park. They both get to defer $245 a month of pretax salary to use for commuting expense. After Jan. 1, car commuters get to keep their $245 per month, while those who take the train will have to make do with $130 per month pretax.
As we said, there’s no way to predict whether any of these existing tax breaks will make it onto the books for 2014. That’s up to those fun-loving guys in Congress. So plan ahead, but be ready for anything.
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