BREAKING: IRS rules same-sex couples can file as married

TreasuryThe IRS ruled Friday that all legally married same-sex couples will be treated as married for federal tax purposes no in matter which state they reside. The ruling applies to income, estate and gift tax. The ruling also affects the earned income tax credit or child tax credit.

Domestic partnerships from states such as Nevada or Oregon or civil unions from states such as Hawaii, New Jersey or Colorado are not considered marriages for federal purposes.

Marriage from other countries such as Canada are recognized by the federal government.

Couples will be able to file a 1040X to amend previous returns up to three years. Married couples that paid tax on domestic partner benefits are entitled to refunds. Some couples will be eligible for a refund if they refile with one spouse claiming the other as a dependent.

Legally married couples will file as “married filing jointly” or “married filing separately.”

—  David Taffet

Tax tips for same-sex couples

Some of the special rights that heterosexual couples enjoy have to do with taxes. But depending on circumstances, gay and lesbian couples who marry may run into the “marriage penalty.”

Tax law was designed for June and Ward Cleaver. Dad is the breadwinner. Mom stays home and raises the kids. If she does have a job, she earns a lot less. The marriage penalty happens when both partners earn about the same amount. So if both partners are equal contributors, monetarily speaking, they’re better off unmarried for income tax purposes.

If a couple has children, a married couple takes a deduction on their joint tax form. Gay or lesbian couples with joint custody cannot. However, the deduction may have a larger impact on one tax form than on the other and either may take the deduction. Check with an accountant.

If you took advantage of the $8,000 tax credit to buy a new home, that credit must be split. The IRS has issued guidelines on that for “single” people who have purchased property with other “single” people.

The IRS allows a single person to file as “head of household” if that person has contributed more than other members of the household toward upkeep. Because of deductions, tax rates may be lower for head of household. Check with an accountant.

—  David Taffet