Couples in same sex relationships who are thinking of getting married should meet with an estate planning attorney to review the estate planning basics, how federal estate taxes impact their situations, and their ability for protecting assets, spouses and children. The Federal rules are changing in favor of tax equality for everyone, including same sex marriage and taxes.
Same sex marriage is not yet recognized in Florida. After the United States Supreme Court case Windsor v. United States, there remained an unanswered question about what would happen if a same sex couple is legally married in one state but then moved to Florida. Becoming effective today, September 16, 2013, is a recent ruling by the IRS, known as Revenue Ruling 2013-17, which answers this question.
The United States Supreme Court recently issued an opinion in Windsor v. United States holding in a 5/4 decision that the Defense of Marriage Act (known as DOMA) violates the equal protection clause of the Fifth Amendment of the United States Constitution and there is no legitimate purpose for not allowing a married same sex couple to file joint tax returns and enjoy the same federal benefits that other married couples have, like the unlimited spousal deduction for federal estate taxes.
General rules for married taxpayers now apply to same sex marriages. For example, if one spouse claims the standard deduction, the other spouse cannot itemize deductions. This new IRS ruling means that same sex couples can get legally married in another state, move to Florida, and still file joint federal income tax returns and receive other federal benefits. In fact, for tax year 2013 and going forward, same sex spouses generally must file their federal tax returns like other married couples, that is, using a filing status of either married filing separately or married filing jointly.
The IRS ruling also states that if the couple was already legally married, same sex married couples may amend their prior federal income tax returns to file jointly (approximately up to three years prior to 2013). As a result, same sex married couples should meet with their accountants to discuss whether they should amend their prior federal income tax returns, as well.
In an earlier blog, we discussed Windsor v. United States when it was in a lower federal court. This is the case that started it all, leading up to today. To recap, Edith Windsor and her late spouse, Thea Spyer, were residents of New York. They were in a relationship for over 40 years and were legally married in Canada in 2007. In 2008, New York recognized same sex marriages performed in other jurisdictions. Ms. Spyer’s estate was required to pay $363,000 in federal estate taxes, whereas, if the federal government had recognized their marriage, Ms. Windsor would have qualified for the unlimited spousal deduction and paid no federal estate taxes. To read that entire blog, click here.
This article is not intended to provide legal or accounting advice without the guidance of trained professionals. Call us at 813-852-6500 to schedule a free 30-minute consultation with an estate planning lawyer.