What are the new tax rules for same-sex married couples?

Now that the Supreme Court has decided Section 3 of the federal Defense of Marriage Act violates the Fifth Amendment’s equal protection clause, same-sex married couples will be able to enjoy many federal tax benefits that were previously available only to opposite-sex married couples.

Not only does the decision have tax consequences, it can also affect estate taxes, gift taxes, and employee benefits and may have health care implications.

Initially, some were concerned about how quickly the IRS and other federal agencies would react to the Supreme Court’s decision, but the agency has been quick to provide information to assist people affected by the decision. In August, the IRS issued Notice 2013-61, which provides guidance for employers and employees on how to claim refunds and adjust overpayments of FICA/employment taxes with respect to certain benefits provided to same-sex spouses.

In addition, the federal government has issued Revenue Ruling 2013-17, and the IRS has added a page titled “Answers to Frequently Asked Questions for Individuals of the Same Sex Who Are Married Under State Law” to its website.

One might then wonder what the impact will be in Wisconsin, which does not recognize same-sex marriage. Under current state rules, individuals who entered into a same-sex marriage in another state cannot file a Wisconsin income tax return using a tax status of married filing jointly or married filing separately. In order to separate the income for Wisconsin, the state has developed a new Wisconsin Form — Schedule S, Allocation of Income to be Reported by Same-Sex Couples Filing a Joint Federal Return.

It’s important for those affected to recognize the new rules and the dates when they become effective. It’s also important to consider the implications for the following year and do your tax planning early.

If you are entitled to a claim for refund of federal income taxes, you will need to use Form 1040X, Amended U.S. Individual Income Tax Return. That form and more information on this subject can be found on the IRS and WDOR websites.

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