Married same  sex couples - new tax rules

(Revised September 1, 2013)


Same sex couples, in long-term relationships, need to review the tax advantages, and disadvantages, of getting married.  Due to the Supreme Court Decision in Windsor, 133 S. Ct. At 2694-95, the same sex couples who get legally married in a state allowing for same sex marriages (e.g. Iowa) are treated as married individuals for Federal income tax purposes.

If you and your partner legally married in 2013 or in a prior year, For Federal income tax purposes you & your partner are considered to be “married” for purposes of filing your 2013 Federal income tax return. You (& your partner) will be considered to be “married” even if the state you live in does not recognize same sex marriages. Therefore for your Federal tax return for 2013, you will need to file either a joint income tax return for file as “married filing separately”. You and your partner will not have to conform to this new filing status for prior years, though as discussed later, you may want to consider it.

For Federal tax purposes, marriages do not include registered domestic partnerships, civil unions, or other similar formal relationships recognized under state law that are not denominated as a “marriage” under that state’s law.

Advantages and Disadvantages of being married for Federal Tax Purposes

Generally, if one spouse has little or no income, filing a joint return results in a lower tax bill because the joint tax rates are more favorable in this situation. Prior to the Windsor, etal, same sex couples were not able to file a joint return.

If both individuals in the relationship are at similar income levels, there may not be advantages of or being recognized as “married” for tax purposes. In fact, the married status may result in higher income taxes. For example, if the same sex couple reside in a house owned by one of the individuals, the couple will save on Federal income taxes by filing separate income tax returns. The homeowner can usually benefit from itemizing in his or her tax return, deducting the mortgage interest and real estates on the residence while the other household member can take a standard deduction. If the couple were previously married, this option is generally not available starting in year 2013.

For a more detailed discussion on filing status for married couples, press here.

What about years prior to 2013?

The IRS ruling on this topic (Rev. Rul. 2013-17) is effective prospectively starting on September 16, 2013. Therefore, if you and your partner married in a state recognizing same sex marriages (ans stayed married) , you will be considered to be married for Federal income tax purposes for all of year 2013. Generally, marital status is determined only at the end of the year.

If you were legally married prior to 2013, you need to review the advantages of filing amended returns, changing your filing status from single to a joint income tax return. As of the date this item the statute of limitations in generally open for year 2010 though 2012.

If you have any questions on topic, contact your tax advisor or contact us by using the link on the menu on the left side of this web-page.