On August 29, 2013 the Internal Revenue Service issued Notice IR-2013-72 stating Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes; Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples. In this landmark ruling, the Internal Revenue Service has opened the door for same-sex couples to have the same rights as other couples.
This ruling will now allow same-sex couples whose marriage is recognized buy their States to file tax returns as married filing jointly. This will open the door for same-sex couples to enjoy the same protections under law that traditional couples enjoy.
Married filing jointly has some benefits and some drawbacks. Because there are two incomes, the income brackets are lower for married couples than they are for single individuals. Effectively, a person in a same-sex relationship will be paying at a lower rate. Conversely, being married has a drawback: the Marriage Penalty. The marriage penalty exists whereby exemptions and some deductions phase-out for those that are married and file a joint return.
Probably the area that same-sex couples will reap the biggest benefit is in the area of Estate Planning. In 2013, an individual has to have a taxable Estate of $5.25 million to qualify for the Estate Tax. In addition the individual has an exemption amount of $5.25 million. If the individual is married and they don’t use the full amount of their exemption, they can pass that exemption on to their spouse. This is called portability. For example, let’s say Bob dies and has a taxable estate of $4 million. Bob is married to Laura. When Bob dies, he still has a $1.25 million exemption that he has yet to use. That $1.25 million exemption is passed onto his spouse so she would have a $6.50 million ($1.25 million + $5.25 million) exemption. Portability will now be available to same-sex couples.
This is huge, and it opens the door for Estate Planners like myself to plan for this for same-sex couples.
For more information visit
If you have any questions you can email Craig W. Smalley E.A., C.E.P.®, C.T.R.S.®
Admitted to Practice Before the Internal Revenue Service
Certified Estate Planner®
Certified Tax Resolution Specialist®
Author of the books:
- It Starts With an Idea – Tax Tips for Small Businesses
- The Ultimate Real Estate Investor Tax Guide
- The Complete Guide to the New Tax Law – American Taxpayer Relief Act of 2012
- Everything You Wanted to Know about the IRS – Audits, Appeals and Collections
- Tax Avoidance is Legal! The Complete Guide to Individual Income Tax
- The Complete Guide to the Affordable Care Act’s Tax Provisions
- The Complete Guide to Retirement Plans for Small Businesses
- The Complete Guide to Estate, Gift and Trust Taxation
- The Complete Guide to Hiring an Accountant
- The Complete Guide to Subchapter S-Corporations,
- Free Money
All available exclusively on Kindle