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Marriage Filing Status and Same-sex Marriage Tax Laws, Latest Legal Decisions

Supreme Court Decision Answers Same-Sex Marriage Recognition Tax Status Questions: Wolters Kluwer Examines the Ruling, Timeline and National Tax Impact

(RIVERWOODS, IL, January 2016) — Only a year ago, the tax status of same-sex married couples varied greatly according to each state's laws and appellate court decisions that often differed with what was already on the books. Although same-sex married couples were already recognized by the IRS on the federal level, it was the Supreme Court that finally provided answers on the state level.

In the Court's 5-to-4 decision on June 26, 2015 in the case of Obergfell v. Hodges (2015-1 ustc 50¶,357), justices ruled that the 14th Amendment requires a state to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when a marriage was lawfully licensed and performed out of state. The decision effectively ended the necessity for legally married same-sex couples in states that did not recognize same-sex marriage to have to file as single individuals for state tax purposes.

Full details of the Court's ruling and its national impact are available in the Wolters Kluwer Tax Briefing, Supreme Court Upholds Premium Assistance Tax Credit; Extends Same-Sex Marriage Nationwide.


In August of 2013, the IRS announced it would now accept a married tax filing status for federal returns filed by legally married, same-sex couples, whether an affected couple lives in a jurisdiction that recognizes same-sex marriage or not. As long as a couple is married in a jurisdiction that recognizes same-sex marriage, the IRS will recognize their marriage, even if the couple later relocates to a jurisdiction that does not recognize same-sex marriage. Estate and gift taxes and payroll taxes associated with many employee spousal benefits were also updated to reflect updated IRS guidelines.

“The IRS said it followed other federal agencies by taking a ‘place of celebration’ approach rather than using a couple’s ‘place of domicile’ to determine tax status. However, some federal agencies, such as Social Security and Veteran’s Administration, had been forced by their enabling statutes to take a ‘place of domicile’ approach,” said Mark Luscombe, JD, LLM, CPA and Principal Federal Tax Analyst for Wolters Kluwer Tax & Accounting. “Affected couples could also look at amending federal returns from open prior years to see if they may benefit from a married tax filing status.”

Background on Marriage Penalty Relief

The American Taxpayer Relief Act of 2012 (ATRA) extended all existing tax breaks for what’s known as the “marriage penalty.”

At one time, there were two obvious contributing sources to the marriage penalty. First, the standard deduction allowed on a joint return was less than twice the amount of the standard deduction for single filers. Second, a couple could move into a higher tax bracket when their incomes were combined on their joint return. Add together two incomes that each might be taxed at 15 percent and you could get a joint income taxed at 25 percent.

Now, the standard deduction for joint filers is twice that of singles, and the 10- and 15-percent tax brackets are twice as high for joint filers, as well. But beyond the 15-percent bracket, the classic “marriage penalty” lingers on. It also lingers on in many other tax breaks where the phase-out for joint filers is less than twice the phase-out for single filers.

“When the income tax was first established, the typical family included only one wage-earner,” Luscombe said. “As a result, some people, especially those in ‘traditional’ families with a principal wage-earner, benefit from the same structures in the tax code that penalize others, such as those in dual-income situations.”

After Obergfell

After the Supreme Court decision in Obergfell, same-sex marriages are recognized in all states, so the place of celebration vs. place of domicile distinction is no longer significant. The IRS still does not recognize civil unions or domestic partnerships as legal marriages. Remaining uncertainties with respect to same-sex marriages involve the extent to which the Obergfell decision is given retroactive effect, i.e. how far back must a marriage be recognized for purposes of issues such as common law marriage, community property, joint and survivor annuities, and homestead exemptions.  These issues may have to be resolved in the courts.

About Wolters Kluwer Tax & Accounting

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More Information

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