New Tax Benefits for Same-Sex Married Couples After the DOMA Ruling

April 2014 | David Williams, Chief Tax Officer at Intuit

The tax-filing landscape for same-sex couples has changed significantly due to the Supreme Court’s decision to strike down the Defense of Marriage Act (DOMA) last June. For the first time, legally married same-sex couples have to file their taxes as a married couple. As a result, same-sex couples are finally able to receive the same federal tax benefits previously only available to couples in heterosexual marriages.

As this may be new territory for many couples, you probably have lots of questions about how to file, what it means to file as a same-sex couple on the federal and state level, and how to know if you’re filing correctly. It’s also important to understand which new tax benefits are available to you as a married couple that you may not be aware of.  For example, together you may be able to claim an education deduction worth up to $4,000 for your child’s college education.

Here are some of the tax benefits to help same-sex couples feel more confident, so you can easily and accurately file your own taxes this year and beyond.

You Can Amend Your Tax Returns for the Previous Three Years. If you were legally married anywhere that sanctioned such unions in 2010, 2011 or 2012, you have the option to amend your federal tax returns from those years as a married couple rather than as two single filers. While you aren’t required to amend your returns, it’s worthwhile to find out whether you’d come out ahead by filing as a married couple. If you’re are not sure how amending your previous years tax returns will benefit you, TurboTax has a free online decision tool available to help figure out if you have a refund coming for those years. 

Possible reduction in the amount of tax you owe. When filing as a married couple, you may benefit from a “marriage bonus”, which means lower tax rates for you compared to filing as single.  For example, if you earned $50,000 and were filing single before the DOMA ruling you were taxed at 25% tax rate, but let’s say now you and your partner’s combined income is $70,000.  As a married couple with income of $70,000 you would be taxed at a lower tax rate of 15%,  giving you a larger reduction in your tax liability.  There is also a “marriage penalty” which can occur when couples with similar incomes find that combining their incomes can push them into a higher tax bracket.  Again, use TurboTax’s free, online decision tool to figure out what’s right for you.

Tax Deductions and Credits for Dependents. When filing your 2013 taxes as married filing jointly, together you are now entitled to valuable tax deductions and credits for your dependents. So don't forget your receipts for things like summer camp, daycare, or college courses you pay for your dependents. These may lead to bigger tax savings when you file together.   

Savings for Your Families.  As a legally recognized married couple, a surviving spouse in a same-sex marriage can now take advantage of the estate tax marital deduction, which allows an unlimited deduction from the gross estate of property passing to the surviving spouse.  This is a huge benefit for same-sex couples and as you may know is one of the reasons DOMA was challenged when Plaintiff Edie Windsor, 84, sued the federal government after the Internal Revenue Service denied her refund request for the $363,000 in federal estate taxes she paid after her spouse, Thea Spyer, died in 2009.

Legally recognized same-sex couples can now take advantage of a doubled annual gift tax exclusion of $28,000.

 

David Williams, chief tax officer at Intuit, leads the company's tax strategy, including implementing programs supporting new tax-related legislation.  Williams also serves as the executive director of the American Tax & Financial Center at TurboTax. Established in November 2012, the Tax Center provides objective and independent data and insights on tax and personal finance trends. In that role, Williams will direct efforts to improve the financial capability of Americans and advise consumers on the practical, real world tax implications as the United States tax code continues to evolve.

Williams has broad experience in public service, developing and implementing tax administration strategies and tax policies. He most recently served as the senior tax policy advisor to the United States Senate Committee on the Budget. Previously he held multiple executive roles at the IRS for more than a decade, including director of the Return Preparer Office and director of Electronic Tax Administration and Refundable Tax Credits.

During his time at IRS, Williams was the U.S. government delegate to and chairman of the Taxpayer Services Group of the Forum on Tax Administration of the international Organization for Economic Co-operation and Development. In that role, he worked extensively with top government officials from national revenue agencies across the globe including Canada, the United Kingdom, Australia, New Zealand and Singapore among other countries. Before working at the IRS, Williams served as deputy assistant secretary of U.S. Department of Treasury and on the staff of former Sen. Bill Bradley of New Jersey.