The Complete Guide to 2014 Tax Filing for Same-Sex Married Couples

If you're in a married, same-sex relationship, you have plenty of reason to celebrate -- and even more reasons to call an accountant. Read on to find out why.

Mar 8, 2014 at 12:00PM

In June 2013, the U.S. Supreme Court struck down the Defense of Marriage Act, otherwise known as DOMA. This decision revolutionizes tax-filing for married, same-sex couples. (Who thought taxes could be so revolutionary?)

First, some background.

In 1996, both houses of the U.S. Congress and President Clinton passed DOMA, a federal law that allowed states to refuse to recognize same-sex marriages performed in other states.  

What does that mean? Well, for example, if an opposite-sex couple gets married in Massachusetts, all 49 other states are required to recognize the marriage, as is the federal branch of the U.S.

But under DOMA, if a same-sex couple got married in Massachusetts, no other state was required to recognize those vows. More importantly (for tax purposes), the federal government didn't need to acknowledge it, either. Federal entities didn't need to recognize same-sex marriages for the purposes of granting Social Security benefits, insurance benefits, immigration status, or tax-filing status.

That changed last June, when the Supreme Court ruled DOMA unconstitutional in a 5-4 vote. This means we're now in the middle of an unprecedented tax-filing season: For the first time in our nation's history, some married same-sex couples must fill out their tax forms as "married filing jointly" or "married filing separately," whichever they choose.

Does your marriage qualify?
To qualify to file taxes as a married couple, you and your partner must be "legally married in jurisdictions that recognize their marriages," according to a press release jointly issued by the IRS and U.S. Treasury Department. To be clear: That means you and your partner can't simply be members of a same-sex civil union. You must be legally wed in one of the 17 states (or District of Columbia) that will perform the marriage. 

That doesn't mean you need to live in one of those states; you simply need to perform the marriage ceremony within those jurisdictions.

Should we file jointly?
You can now choose whether to file taxes jointly or separately, just as opposite-sex married couples choose. This is a key benefit.

However, you may not want to file jointly. This decision should involve a conversation with your tax advisor.

If one partner earns a high income (and is in a high tax bracket) and the other partner earns a lower income (and is in a lower tax bracket), you may benefit from filing taxes jointly. But if both of you are high-income earners, you may (or may not) pay a smaller tax bill by filing separately.


(Of course, "married filing separately" raises several other complications. For example, the upper income limit for contributing to a Roth IRA in tax year 2013 is $183,000 for "married filing jointly" but only $10,000 for "married filing separately.") 

Your precise recommendation will depend on your income, deductions, and other individual considerations, so talk to a CPA (preferably one who is experienced at managing same-sex issues.) 

The bottom line, though, is that the choice is now yours.

What other benefits do you have?
Beyond capitalizing on a potential opportunity to shield some of your income within a lower tax bracket, though, the downfall of DOMA offers plenty of other benefits:

  • Did you purchase health insurance through your employer for your same-sex spouse? Did you pay for these premiums with after-tax dollars? If you answered "yes" to both questions, you can now deduct those premiums.
  • Does one partner earn the majority of the income, while the other is a stay-at-home spouse? If so, the breadwinner can claim the other spouse as a tax dependent.
  • Does only one spouse collect "earned income?" If so, you're now eligible to open a Spousal IRA for the other partner, based on your joint household earned income. 

Furthermore, you're now eligible to claim child tax credits, joint itemized deductions, personal exemptions, the earned income tax credit, and joint retirement benefits.The establishment of federally recognized same-sex marriage also opens an entire new world of immigration claims. 

There's also a time-sensitive component you should know: If you were legally married within the last three years (in 2010 or later), you can file an amended tax return in order to retroactively claim any benefits that you would have been eligible to receive if you had filed as a married couple. 

For example: Let's assume you've been married since 2010. You've been paying out of pocket for health insurance premiums for your spouse for that entire time. Your spouse stays at home with the children and doesn't collect an income. Under this scenario, you may be eligible to file an amended tax return to claim your spouse as a dependent, deduct your health premiums, and contribute to a spousal IRA.

But hurry -- the statue of limitations on your amended tax return is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. 

Again, please consult with a CPA who specializes in working with same-sex married couples.

DOMA was a tax ruling
One final tidbit of history: Did you know that the strikedown of DOMA was a tax ruling?

Thea Spyer and Edith Windsor were together for 40 years. They officially married in Canada in 2007, and they resided in the state of New York, which recognized their marriage. But when Spyer passed away, Windsor was hit with a $336,000 federal estate tax bill -- which she wouldn't have received if the IRS recognized her marriage.


Windsor filed a lawsuit against the IRS, seeking a tax refund. The suit claimed "differential treatment compared to other similarly situated couples without justification." 

Her tax-refund request changed the world.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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