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By: Janice Kaye*/Special to TRT—
Have you been married for any of the last 3 years? Did you file your taxes as single because the federal government didn’t recognize your marriage? Well, the latest ruling from the Supreme Court justly allows recompense for the additional taxes you may have paid because of the tax code’s position toward gay marriage. This applies to those who got married in D.C. or in the 13 states that allow same-sex marriage. Now it’s finally time to collect.
There is a great deal to celebrate as a result of the decision to overturn the “Defense of Marriage Act.” The historic precedent, so long overdue, that the federal government recognizes the union between people of the same sex as being equal is first and foremost on most people’s minds. However, the lawsuit that brought the issue before the court hinged upon an unjust tax remittance. The consummation of this ruling is not only that same-sex couples have their marriages recognized by the federal government, but that they reap the financial benefits that all married couples are entitled to. [pullquote]The consummation of this ruling is not only that same-sex couples have their marriages recognized by the federal government, but that they reap the financial benefits that all married couples are entitled to. [/pullquote]
What are the tax advantages of being married? More than can fit into this column, but if any of the following situations apply to you there is a very good chance you are due money from the government.
If your spouse passed away and you had to pay taxes on the estate they left you then you are due a refund because married couples have an unlimited estate tax deduction. This particular benefit was at the center of the Supreme Court ruling.
You can also transfer property and give gifts without incurring additional taxes. Same-sex couples will qualify for gift splitting, where the value of a gift given to one of the spouses can be split equally to the two of them for tax purposes.
If you receive health benefits from your Spouse’s employer that covers both you and your spouse, then your tax liability will go down as well. Employers no longer have to add the value of medical coverage for your spouse as additional income on their W-2.
The single benefit that affects the most married couples is a choice: whether to file a joint tax return for the couple or to file two separate tax returns. In most cases the tax liability is lower for a couple filing a joint return, which was not an option for same sex couples before this ruling. [pullquote]… consulting an accountant as to whether you and your spouse would be due a refund with amended ‘Married Filing Jointly’ returns is the best course of action.[/pullquote]
However not all married couples benefit from filing a joint return. It depends on a number of factors and consulting an accountant as to whether you and your spouse would be due a refund with amended ‘Married Filing Jointly’ returns is the best course of action. With that disclaimer said, if one spouse is generating significantly more income than the other then they will most likely be due a refund. If one spouse is generating no income and the other is then it is almost certain that you will get money back by filing jointly.
If both spouses are generating income it could go either way as far as greater or lesser tax liability from filing jointly. A sign that you would be due a refund is if one spouse makes considerably more money than the other. If, for example, one spouse makes around $35,000 a year and the other makes $230,000, then filing a joint return would result in a reduced tax liability of several thousand dollars for the IRS. Simply put, if there is a big difference in income between you and your spouse it is likely you would be due a refund by filing jointly. [pullquote]Simply put, if there is a big difference in income between you and your spouse it is likely you would be due a refund by filing jointly. [/pullquote]
If any of the above applies to you then you should get in touch with an accountant to make sure you are able to collect what you are owed from as many years as possible. Doing so is your right! You can amend your return(s) for three years back from the actual date of filing your returns.
*Janice Kaye is the CEO of a boutique accounting and financial services firm. She has over 15 years experience in her firm, Financial Solutions Int’l. The firm has a wide variety of small to mid size businesses and individual clients and prepares tax returns in all the states that apply to this ruling. Before starting her own practice she was the CFO for several nationwide corporations. She can be reached at email@example.com or 201-947-1171.