The IRS’ gay marriage taxes decision will result in higher taxes for same sex couples.
As previously reported by The Inquisitr, back in July, the IRS wasn’t sure how gay marriage taxes would be enforced on a state-by-state basis.
For the IRS gay marriage only became an issue after the Supreme Court’s DOMA decision, which struck down a portion of the Defense Of Marriage Act passed under the Clinton administration. The Supreme Court did not choose to rule on the constitutionality of gay marriage itself, but they did rule that homosexual couples should receive federal benefits… and all the taxes that come with them.
So what remains of DOMA? The original lawsuit against DOMA focused on portions of section three. The federal statute still defines marriage as between one man and one women and protects states from having to recognize gay marriage as valid. But the IRS is a Federal agency, and so they were left with the choice of deciding how the remainder of DOMA should be enforced.
Today’s IRS gay marriage taxes decision means that same sex couples will be treated as married for income, gift, and estate tax purposes no matter what state they currently reside within. This means that gay couples can be married in one of the 12 states where gay marriage is legal, move to one of the other 38 states, and still have their gay marriage recognized for IRS tax purposes even if the state doesn’t recognize gay marriage as legitimate. But the IRS’ gay marriage taxes decision doesn’t apply to registered domestic partnerships, civil unions, or any other similar state-established relationships.
So what does the IRS’ gay marriage taxes decision mean for the average same sex couple? They now won’t have to pay taxes on health insurance benefits received through a spouse. Estate taxes under marriage laws are another bonus. The bad news for gay couples is that they will now suffer the the IRS marriage penalty because their combined incomes will plunk them in a higher marginal tax rate bracket. Previously, homosexual couples could file separately and claim multiple credits only available to singles. There’s also the possibility the IRS may still require retroactive back taxes to be paid for three years, although the IRS hasn’t said anything to this effect yet.
What do you think about the IRS’ gay marriage taxes decision?