Womens Week

Financial Advice: Ellen M. DeSarno

Financial fitness with Ellen M.DeSarno
An Unexpected Holiday Gift for Married Couples?

This year, some same-sex married couples could receive four years’ worth of tax refunds at once. It sure beats a gift of four calling birds or three French hens!

On August 29, the U.S. Treasury Department issued long-awaited guidance in its Revenue Ruling 2013-17 and Notice IR-2013-72. The new rules will clear up confusion about the way same-sex couples, who are now recognized as legally married by the federal government, should handle their federal tax returns.

For tax year 2013, couples who were married in jurisdictions where their marriage was recognized legally (15 states*, the District of Columbia, and 15 foreign countries) must file their federal tax return as “married” or “married, filing separately,” regardless of the state they live in.

We’ve all heard of the “marriage penalty,” the instance in which combining your incomes can result in a higher tax bracket and phaseout/ limitation of deductions and tax-preference items. However, many people now may qualify for a “marriage bonus,” which results in a lower combined tax. The first time you file together, you’ll see whether marriage is a financial “penalty” or a “bonus” for you.

The IRS has further stated that these legally married couples may file amended tax returns for the years 2010, 2011, and 2012. This ruling also applies to estate and gift tax returns, following the Supreme Court’s decision in United States v. Windsor last June.

Seek the advice of a qualified accountant to see if you may qualify for a tax refund in the earlier years due to combined bracket, dependent exemptions, better tax treatment of employer benefits, or the unlimited marital deduction.

Keep in mind that you must have been legally married during the year of your amended return. Here’s a handy list of states that have legalized marriage equality and the year the laws took effect:

2004: Massachusetts
2008: California (between June 17 and November 4), Connecticut
2009: Iowa, Vermont
2010: New Hampshire, District of Columbia
2011: New York
2012: Washington, Maine
2013: Maryland, Delaware, Minnesota, Rhode Island, California, New Jersey, Hawaii

*Same-sex marriage goes into effect in Illinois on June 1, 2014.

 

Financial services available to individuals and business owners through AXA Advisors, LLC include: strategies and products for financial protection and investments; asset allocation, college, retirement, business and estate planning strategies; life insurance, annuity and investment products, including mutual funds. Securities products are offered through AXA Advisors, LLC, NY, NY, member FINRA, SIPC, 10104 (212) 314-4600. Insurance and annuity products are available through an affiliate, AXA Network, LLC and its subsidiaries. AXA Advisors and AXA Network do not offer tax or legal advice. Please consult with your professional tax and legal advisors regarding your particular circumstances.

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