On Thursday, August 29, The U.S. Department of the Treasury and the Internal Revenue Service (IRS) and the Department of Health and Human Services announced new rules that clarify how legally married same-sex couples will be treated by federal agencies, regardless of where they live.
Same-sex married couples and tax advisors have been waiting for the rulings since the June ruling by the U.S. Supreme Court that struck down Section 3 of the federal Defense of Marriage Act (DOMA) that denied federal benefits to married same-sex couples.
Tax Status Doesn’t Require State Recognition
Under the new rules, same-sex couples who are legally married will be treated as married for all federal tax purposes, including income, estate and gift taxes. The ruling applies regardless of whether the couple resides in a state or jurisdiction that recognizes their marriage.
Treasury Secretary Jacob Lew said, “The new rules will provide clear, coherent tax filing guidance for all legally married same-sex couples nationwide.”
Gary Milkwick, CPA and vice president at 1-800Accountant, said that the new rules are important for same-sex couples because they make it clear that legally married same-sex couples can move freely throughout the U.S. without affecting their federal tax filing status.
“The new regulations cover all federal tax provisions where marriage is a factor, including the taxpayer’s filing status, personal and dependent exemptions and standard deductions,” he added. “The inclusion of all three tax categories — income taxes, estate and gift taxes — while expected, is very welcome because it gives married same-sex couples and tax advisors the assurance that they’ve needed since the Supreme Court decision that the IRS will treat same-sex married couples equally in all tax matters.”
The new rules also clarify that married same-sex couples who would have received a refund in tax years 2010, 2011, and 2012 if their marriages had been recognized can still file re fund claims.
HHS Issues Medicare Rules
Also on Thursday, the U.S. Department of Health and Human Services (HHS) announced that all beneficiaries in private Medicare plans have access to equal coverage when it comes to care in a nursing home where their spouse lives. It’s the first word from HHS on changes related to the DOMA decision, although the agency said that it is the first of several that can be expected soon.
“HHS is working swiftly to implement the Supreme Court’s decision and maximize federal recognition of same-sex spouses in HHS programs,” said HHS Secretary Kathleen Sebelius. “Today’s announcement is the first of many steps that we will be taking over the coming months to clarify the effects of the Supreme Court’s decision and to ensure that gay and lesbian married couples are treated equally under the law.”
Under current law, Medicare beneficiaries enrolled in a Medicare Advantage plan are entitled to care in the same skilled nursing facility where their spouse resides if the couple has met the criteria for coverage. Until now, however, Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner said that same-sex married Seniors faced the choice of receiving coverage in a nursing home away from their same-sex spouse or paying more out-of-pocket for care in the same nursing home as their same-sex spouse after dis-enrolling from the plan.
Like the IRS rules, the HHS announcement specifies that the new guidelines apply to legally married same-sex couples regardless of where they live, or where they were married. Sebelius says that additional rules can be expected in the coming months to clarify the effects of the DOMA decision.
1-800Accountant has published a white paper titled The Tax Fallout from DOMA that is available for free download by clicking here. In addition, Milkwick says that same-sex couples with questions about the impact of the DOMA decisions — or business owners with questions about how the ruling affects their company’s benefits plan or policies — can take advantage of 1-800Accountant’s free tax consultation to get answers.
“We’ve been working with same-sex couples for years to help them navigate the maze of state and federal tax rules, and since the DOMA decision was announced earlier this summer, our staff has been fielding a wide range of calls from business owners as well. No one has all the answers yet, as agencies like the IRS and HHS continue to issue guidelines, but if a guideline has been issued, we know about it and are prepared to explain how it applies to individual situations.”
To schedule a free consultation with 1-800Accountant, click here.