American Foundation for Equal Rights

Marriage News Blog

6 things gay and lesbian couples need to know about their taxes

On Thursday, the Treasury Department announced that all married gay and lesbian couples, regardless of where they live in the U.S., will be treated as married for all purposes of tax law.

This policy is in incredibly important for a number of reasons. First, it makes it crystal clear that federal tax laws and policies apply to all married couples, regardless of where they live. Second, it will greatly reduce confusion for same-sex couples and their employers, especially for those people who work in one state and live in another. Third, it erases much of the “gay tax,” whereby married gay and lesbian couples in states with marriage equality were treated as legal strangers for their federal taxes. In many cases, this was could amount to thousands of dollars in additional taxes with fewer rights.

While there is still a long way to go to ensure couples and families in 37 states have the state recognition they are entitled to, the new tax policies of the federal government will ease a great burden for many gay and lesbian couples and their families, especially around tax season.

Here are six things you need to know about the new ruling, according to the Treasury Department. You may want to consult your attorney before taking any action:

  1. Under the ruling, legally married gay and lesbian 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.
  2. Any gay or lesbian couple married in a state that recognizes marriage equality, 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.
  3. Legally-married gay and lesbian couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.
  4. Married individuals 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. The ruling does not apply to state taxes.
  5. 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.
  6. Additionally, gay and lesbian employees who purchased health insurance coverage for their spouse from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.