Important 2013 Court Rulings Will Affect Same Sex Couples’ Upcoming Income Tax Returns
2013 proved to be a landmark year for court decisions in favor of marriage rights for homosexual couples. The changes in both the federal and New Jersey legal landscapes have created several substantial effects, with one of those being the filing of 2013 federal and state income tax returns.
The U.S. Supreme Court’s ruling in U.S. v. Windsor struck down several provisions of the federal Defense of Marriage Act. Subsequently, the Internal Revenue Service issued Rev. Rul. 2013-17, which stated that legally married same-sex couples will be considered married for federal tax purposes. In the past, members of same-sex couples, even if they legally married in places like Vermont or Massachusetts, had to file their federal Form 1040 returns as single persons.
The ruling does not merely permit same-sex married couples to file as married; it requires it. Just like heterosexual married couples, same-sex married couples must choose between the statuses of “married filing separately” or “married filing jointly.” As with heterosexual marriages, most same-sex couples will realize a lower tax liability by filing jointly as opposed separately. In the fall of 2013, the New Jersey Supreme Court’s decision in Garden State Equality v. Dow permitted same-sex couples to marry here. The ruling has a less dramatic effect on filing state income tax returns in New Jersey than Windsor had on federal returns. New Jersey had previously enacted a civil union statute that became effective as of Jan. 1, 2007. Starting with 2007 state returns, the New Jersey Division of Taxation required same-sex civil union partners to file under the same rule as married couples, meaning that they must select either “married / CU couple” filing jointly or “married / CU couple” filing separately.
New Jersey civil union couples should pay particular attention to the limitations imposed by Rev. Rul 2013-17. While that ruling permits same-sex married couples to file as such, it limits that option specifically to married couples, excluding civil unions and domestic partnerships. As a result, if you are a part of a New Jersey civil union, and have not also gotten married here or in another state that recognizes same-sex marriage, you must still file your federal return as a single person.
New York has recognized same-sex marriage since 2011. New York law required married same-sex couples to claim married status on their state income tax returns, even as they filed their federal returns as single persons. Starting with 2013 returns, New York now requires taxpayers to file their state returns using the same status as they elect on their federal returns.
The groundbreaking new decisions on same-sex marriage on both the state and federal level have created numerous ripple effects, including in the area of taxes. If you are part of a same-sex couple and contemplating your 2013 income tax returns, consult the experienced tax attorneys at Samuel C. Berger, P.C. and CPAs at S.C. Berger, P.C. Their extensive knowledge can help guide you through the new laws and rules, and ensure that your returns are compliant and take maximum advantage of the new options available to you. To consult our attorneys and CPAs, contact us online or call (201) 587-1500 or (212) 380-8117.
More Blog Posts:
New York Court Rules That a Partner May Unilaterally Withdraw from Partnership That Lacks a Defined Duration or Objective, New York & New Jersey Business Lawyer Blog, Sept. 12, 2013
U.S. Supreme Court’s Ruling Striking Down the Defense of Marriage Act Has Profound Impact on Binational Same-Sex Couples Seeking Immigration Benefits, New York & New Jersey Immigration Lawyer Blog, Aug. 9, 2013
Immigration Authorities Expand Prosecutorial Discretion Policies to Include Same-Sex Relationships, New York & New Jersey Immigration Lawyer Blog, Nov. 23, 2012
Photo credit: Stefano Bolognini at Wikimedia Commons.