When the U.S. Supreme Court struck down the federal Defense of Marriage Act (DOMA) on June 26, it kicked off a Gay Pride week celebration like no other. Barely two weeks later, however, reality is setting in for same-sex couples and small business owners who are realizing that the ruling creates both tax opportunities and potential problems.
Brendon Pack, CPA and Vice president at 1-800Accountant says that in the days since DOMA was struck down, the company has had a number of inquiries from its clients. “We have had quite a few inquiries regarding amending previous year’s tax returns in light of the DOMA ruling. We expect this will turn into an avalanche as we get closer to tax season and people are provided more context around the ruling and its practical applications.”
Calling a tax consultant for advice on taxes that will be affected by DOMA is the right move, since every taxpayer’s individual situation will change how the court’s decision affects them, but it may be months before all of the rules, regulations, and implications of the ruling are clear.
Gary Milkwick, CPA and Vice president at 1-800Accountant adds, “We have been doing tax returns for same sex couples for many years, so this ruling has a huge effect on these clients. In states where same-sex marriages are performed, we are receiving questions about whether clients should amend past tax returns going back to the year in which they were married. We’re also getting a lot of questions about estate-planning issues since it is no longer clear whether the special trusts which were often set up to protect same-sex families will be more or less beneficial in terms of taxes than the laws which previously did not apply to same-sex married couples.
“Last, but hardly least, many of our same-sex clients are rightly concerned about the impact that the marriage penalty may have on their taxes. Many of our small business clients who offer benefit plans to employees are also wondering how the DOMA ruling will affect those benefit plans. Sorting it all out and finding the best path can be confusing without help from a tax advisor who is on top of the rapid changes this ruling is creating.”
Where to Get Answers
1-800Accountant has just published a new white paper that summarizes what is known about how the DOMA ruling will affect taxes for:
- Same-sex married couples
- Same-sex unmarried couples considering taxes as part of the decision whether to marry
- Business owners considering the ruling’s implication on their benefits plan
- Families considering the inheritance issues relating to a transfer of property when one or more of the property owners or beneficiaries is a partner in a same-sex marriage
The white paper, titled The Tax Fallout from DOMA: What the SCOTUS Decision Means for Businesses, Employers, and Same-Sex Couples, is now available for free download from the Resources page of the 1-800Accountant website. “The white paper is as comprehensive as it can be in the current climate of uncertainty, but it is not the final word and will be updated as new information becomes available,” Milkwick said. “It’s a starting point, but individual and business taxpayers need to discuss specifics with their own tax advisor before making decisions.”
The Tax Fallout from DOMA: What the SCOTUS Decision Means for Businesses, Employers, and Same-Sex Couples includes sections on:
· Joint Returns for Same-Sex Couples: Will taxes go up – or down?
· Changing Estate Planning Strategies
· Impact on Business Owners & Employer Benefit Plans
· Conclusion: Some Benefit, Others Don’t
Photo Credit: This photograph of the frieze decorating the front of the U.S. Supreme Court was offered under a Creative Commons license on Flickr by the Photo Phiend Photostream.