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Against DOMA: Same-sex couples to be treated as married for US Federal Tax & other benefits

September 5, 2013

IRS Guidance in regards to DOMA Ruling

On June 26, 2013 the U.S. Supreme Court struck down Section 3 of the Federal Defense of Marriage Act (DOMA) as unconstitutional.

AG LLP’s crossborder tax specialists wrote a summary of the potential implications of such a ruling back in July (click here for article). The U.S. Treasury Department and the Internal Revenue Service (IRS) recently issued guidance that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for Federal tax purposes, irrespective of whether the couple live in a jurisdiction that recognizes same-sex marriage or not. As per the IRS Newswire, “Under the ruling, same-sex couples will be treated as married for all Federal tax purposes, including income and gift and estate taxes. The ruling applies to all Federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit…However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.”

What was DOMA?

DOMA was a U.S Federal law that allowed states and Federal government to refuse to recognize same-sex marriages which were granted ‘marital’ status under the laws of certain states which legally recognized the marriage of same-sex couples. Due to this law, same-sex couples had to file jointly in those states that recognized gay marriages while having to file individual Federal tax returns because the U.S. Government treated them as ‘single’.

It also affected employee benefits, estates and transfers of assets between spouses, since as per Section 3 of DOMA: same-sex marriages were not recognized for Federal purposes; including group insurance and health benefits, social security survivors’ benefits, immigration, bankruptcy, and the filing of joint tax returns. It also excluded same-sex spouses from the scope of laws protecting families of Federal officers, laws evaluating financial aid eligibility, and Federal ethics laws applicable to opposite-sex spouses.

However with the recent guidance by the US Treasury and IRS, legally-married same-sex couples must now file their Federal income tax return using either the ‘married filing jointly’ or ‘married filing separately’ filing statuses.

They may file original or amended returns choosing to be treated as married for Federal tax purposes for one or more prior tax years which are still open under the statute of limitations.

Refund claims can also be filed for three years (2010, 2011 and 2012) as per the statute of limitations or two years from the date the tax was paid, whichever is later.

This decision also opens the door for US citizens or lawful permanent residents in a same-sex marriage to foreign nationals to file petitions for family-based immigrant visas.

AG Tax LLP Can Help

If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of U.S. and Canadian tax laws as well as cross-border compliance

Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.

We can assist with:

  • Canadian Personal and corporate tax returns
  • Cross Border Taxation and Business Planning
  • U.S. Personal and Corporate Taxation
  • Disclosure of Foreign Assets and other information filings
  • Retirement planning
  • State Sales Tax & E-commerce Taxation
  • Estate Planning, Inheritance tax advice

To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:

  •  416-238-5920 (Greater Toronto Area, ON)
  • 604-538-8735 (Greater Vancouver Area, BC)
  • 780-702-2732 (Greater Edmonton Area, AB)

 

Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.

ABOUTAylett Grant Tax, LLP
With offices across Canada, we are positioned to manage and process the full scope of your Canadian, US and US Canada cross-border tax filing needs.
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ABOUTAG Tax LLP
With offices across Canada, we are positioned to manage and process the full scope of your Canadian, US and US Canada cross-border tax filing needs.
OFFICEVancouver
12752 28th Ave, Surrey, BC, V4A 2P4
OFFICEEdmonton
104–4220 98 St NW Edmonton AB, T6E 6A1

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