Post-DOMA Tax Considerations for Same-Sex Couples

NEW YORK (MainStreet)—Looking for some money in the mailbox, same-sex spouses may be rushing to file amended tax returns, in anticipation of a sizable refund check. The Supreme Court's landmark decision ruling the Defense of Marriage Act as unconstitutional will certainly have a significant impact on the financial planning of married same-sex couples, but while many things have changed, some stay the same – and many questions remain. The IRS is still reviewing the decision and has yet to issue new guidance to taxpayers -- especially concerning the estimated $200 million in tax refunds to some 75,000 married same-sex couples.

What hasn't changed

"Every couple in a long-term committed relationship, whether married or not, should create a mutually developed financial plan addressing income, expenses, savings, investments and major purchases," says Marty Martin of Aequus Wealth Management in Chicago. "Every couple ought to have a will and, depending upon their situation, also have in place ways to transfer assets without having to go through probate -- such as joint bank accounts, payable upon death bank accounts and life insurance policies. Depending upon the state, each couple should also have a health care power of attorney, as well as a general power of attorney."

Martin notes that another example of what has not changed is that couples of all types can give up to $14,000 per year to another person as a gift, without being penalized by taxes.

What has changed

Married same-sex couples are now recognized by the federal government in the same manner as married opposite-sex couples, entitling them to specific benefits unavailable before. But there is a caveat.

"Federal recognition does not mean state recognition," says Martin. "For instance, a married same-sex couple is able to file jointly under the federal IRS regulations but not necessarily under state law -- unless the state legally recognizes this same-sex couple as married. In essence, there is still a lot of variation depending upon which state you happen to live."