Same-Sex Married Couples—Tax Filing Rules

On June 26, 2013, the U.S. Supreme Court ruled that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional because it violates the principles of equal protection (Windsor, U.S. Supreme Court, June 26, 2013). The IRS has now issued guidance on the effect of the Windsor decision and how the IRS interprets the sections of the Internal Revenue Code that refer to a taxpayer’s marital status. Specifically, Revenue Ruling 2013-17 deals with the following issues for federal tax purposes as a result of the Windsor decision:

  • Whether the terms “spouse,” “husband and wife,”“husband,” and “wife” include an individual married to a person of the same sex, if the individuals are lawfully married, and whether the term marriage includes such a marriage between individuals of the same sex. For this purpose, lawfully married means a legal marriage under any domestic or foreign jurisdiction having the legal authority to sanction marriages (such as a state that legally sanctions same-sex marriages).
  • Whether the IRS recognizes a marriage of same-sex individuals validly entered into in a state (or other jurisdiction) whose laws authorize the marriage of two individuals of the same sex even if the state in which they are domiciled does not recognize the validity of same-sex marriages
  • Whether the terms “spouse,” “husband and wife,” “husband,” and “wife” include individuals (whether of the opposite sex or same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and whether the term “marriage” includes such relationships.

Effective Date

The IRS Revenue Ruling is effective September 16, 2013. However, affected taxpayers may also rely on this Revenue Ruling for the purpose of filing original returns, amended returns, adjusted returns, or claims for credit or refund for any overpayment of tax resulting from this Revenue Ruling, provided the applicable statute of limitations period has not expired. If such a return is filed based on this Revenue Ruling, all items required to be reported on the return or claim that are affected by the marital status of the taxpayer must be adjusted to be consistent with the marital status reported on the return or claim.

Taxpayers may also rely on this Revenue Ruling retroactively with respect to any employee benefit plans and arrangements for purposes of employer-provided health coverage benefits or other fringe benefits that were provided by the employer and are excludable from income under the Internal Revenue Code based on an individual’s marital status.

Recognition of Same-Sex Marriages

There are more than 200 provisions in the Internal Revenue Code and Regulations that include the terms “spouse,” “marriage,” “husband and wife,” “husband,” and “wife.” The IRS Revenue Ruling states that such terms also apply to individuals lawfully married under state law (or other jurisdiction) to a person of the same sex, and to legal marriages under state law (or other jurisdiction) between individuals of the same sex. It does not matter if a term is gender-neutral or gender-specific because the ruling in Windsor said any federal law that confers marriage benefits and burdens only on opposite-sex married couples is unconstitutional.

Marital Status and State Tax Returns

On June 26, 2015, the U.S. Supreme Court held in a 5-4 decision that the Fourteenth Amendment requires all states to grant same-sex marriages and recognize samesex marriages granted in other states. Individual states
have issued guidance on tax filing for same-sex married couples.

Registered Domestic Partnerships, Civil Unions, or Other Similar Formal Relationships Not Denominated as Marriage

For federal tax purposes, the IRS Revenue Ruling says the term marriage does 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, and the terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals who have entered into such a formal relationship. This applies regardless
of whether individuals who have entered into such relationships are of the opposite sex or the same sex.

For example, if employees could elect to make pre-tax salary-reduction for health coverage under an IRC section 125 cafeteria plan, and the employer also elected to provide health coverage for a same-sex spouse on an after-tax basis under a group health plan sponsored by that employer, the affected taxpayer may treat the amounts that were paid by the employee for the coverage of the same-sex spouse on an after-tax basis as pretax
salary reduction amounts.

There is nothing in the Revenue Ruling that requires an affected taxpayer to amend a previously filed return to pay additional taxes such as a marriage penalty. The election to file amended returns only applies to overpayments
of tax. There is also nothing in the Revenue Ruling that says it is optional for a legally married same sex couple to be treated as married for federal tax purposes. Thus, if a married same-sex couple is subject to a marriage penalty as a result of their legal marriage, they do not have the option to file as if they were not married.

For more assistance with your tax preparation or tax services as an LGBTQ couple contact the advisors at Wealthnest Tax Services, we are conveniently located in Chandler, Arizona. You can contact us 480-699-5275 or visit us at Wealthnesttaxservices.com.