Same Sex Married Couples Receive Tax Benefits

The Treasury Department announced that federal tax benefits for married couples now extend to same-sex married couples.

Edie Windsor finally gets her estate tax exemption

Edie Windsor, shown here celebrating her Supreme Court victory, can now get her estate tax exemption, thanks to Treasury Department rule changes concerning same-sex married couples. (Image Source:  Reuters)

The Supreme Court's decision to strike down the Defense of Marriage Act has been slowly trickling down through the federal bureaucracy.  Rules have to be assessed, guidelines examined, lots of typing abounds to make edits that fit into the context of the ruling.  Such is the case with taxes, that inevitable thing that is drinking buddies with death.  Today, two months after United States v. Windsor was handed down, the Treasury Department announced that, effective immediately, the government  will treat legally married same-sex couples as married for tax purposes.

The implications of this rule change is particularly staggering.  The most basic understanding of this rule change is simple:  Same-sex married couples can now file their taxes jointly or separately as a married couple.  Previously, each spouses had to file their taxes separately as single people, which for most same-sex couples is far more expensive and more frustrating than heterosexual couples filing their taxes as married.  In addition to filing taxes as married for 2013, same-sex married couples can file amended returns as married couples, and claim a refund for as far back as 2010.

The benefits for same-sex couples do not end there.  For married couples that have same-sex spousal coverage in their employee health insurance, the federal government will no longer claim income tax for the plan, and will accept refund claims for those spousal coverage premiums from 2010 onward.  In addition, widowed same-sex spouses can now inherit their late spouse's estate tax-free, due to changes to the estate tax.

The rule change brings the Supreme Court ruling against DOMA full circle.  Edie Windsor, the lead plaintiff in United States v. Windsor, lost her wife Thea Spyer, whom she married in Canada, in 2009.  When Windsor sought to claim the federal estate tax exemption as a surviving spouse when she claimed Spyer's estate, the IRS denied her the claim on the grounds that Section 3 of DOMA said that "spouse" applies only to marriages between men and women.  Windsor consequently sued the government, leading us to history two months ago.