The national debate over same-sex marriage reached a boiling point when the Supreme Court of the United States overturned a portion of the Defense of Marriage Act. The SCOTUS ruling gives legally-married same-sex couples the right to file a joint income tax return beginning in tax year 2013. It also grants same-sex married couples the right to amend prior year taxes that were already filed, so they may recoup overpayments.
As one might expect, collecting same-sex tax overpayments is challenging, as current forms are not written to easily accommodate the new rules.
Defining Legal Same-sex Marriage
The federal government defines a legal same-sex marriage as a same-sex, non-dependent couple who married in a jurisdiction after that jurisdiction recognized same-sex marriage. This means a couple who married in New York, New Jersey or Connecticut, for example, is eligible to file either a married filing jointly or married filing separately tax return.
Although federal rules permit legally-married same-sex couples the right to file a joint income tax return if they choose to live in a state that does not recognize same-sex marriage, the financial and personal risks can be severe. This is something to keep in mind for those who live in the tri-state area on a part-time basis.
Amending a Prior Year Return
Past tax law treated same-sex couples as strangers, and the new federal rules add up to significant savings for those who are legally married. For example, tax benefits enjoyed by married couples — such as spousal “death tax” avoidance, which can total hundreds of thousands of dollars and sometimes more — are now applicable to same-sex married couples in eligible prior years.
There are other financial benefits as well. A same-sex spouse who was once unable to take advantage of employer-sponsored health insurance and had to purchase private insurance can now join a family plan in states that recognize same-sex marriage.
Unfortunately, amending a prior year return to account for same-sex marriage using 1040X is complicated because the current format is not written with legal same-sex marriage in mind — making a costly mistake is easy.
The IRS has not yet issued instructions on how to modify two returns into one same-sex, married filing jointly, for prior year returns. Although the instructions on the existing 1040X form are relatively clear for a standard prior year adjustment, those who wish to make a change should contact an experienced CPA who will have the knowledge and expertise required to correctly amend an eligible prior year return.
Hiring a Professional
212 Tax offers a wide range of income tax services, including amending prior year returns to account for a legal same-sex marriage. For more information, contact us at (646) 699-4818 or .