On August 29, 2013, the Internal Revenue Service released guidance on the treatment of same-sex marriages for federal tax purposes. This guidance responds to the U.S. Supreme Court ruling that portions of the Defense of Marriage Act that limited marriages for federal purposes to opposite-sex unions are unconstitutional.
Under this guidance, the IRS will recognize all legal same-sex marriages for federal tax purposes, regardless of whether the couple lives in a state that recognizes same-sex marriages. The ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
Legally-married same-sex couples generally must file their 2013 federal income tax return using either the married filing jointly or married filing separately filing status. Affected taxpayers may choose (but are not required) to amend their federal tax returns and file a claim for refund for tax years for which the period of limitations has not expired. A taxpayer generally may file a claim for refund for three years from the date the return was filed or two years from the date the tax was paid, whichever is later. Employers can claim a refund for the social security taxes and Medicare taxes paid on benefits for same-sex spouses in past years for which the period of limitations for filing a claim for refund is open.
Beginning September 16, 2013, qualified retirement plans must treat a same-sex spouse as a spouse for purposes of satisfying the federal tax laws relating to the plans. For these purposes a qualified retirement plan must recognize a same-sex marriage that was validly entered into in a jurisdiction whose laws authorize the marriage, even if the married couple lives in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages. Retirement plan provisions affected by these rules include qualified joint and survivor annuities, death payments, hardship distributions, rollovers, plan loans, qualified domestic relations orders (QDROs) and required minimum distributions.
The IRS will issue further guidance on such issues as required plan amendments and the retroactive application of the Supreme Court's opinion to employee benefit arrangements. The IRS says it will provide sufficient time for plan amendments and any necessary corrections so that the plan and benefits will retain their favorable tax treatment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
