2013 Year in Review:  DOMA Ruling Changes Taxation Landscape

Jean McDevitt, Tax Principal
February 2014

The Defense of Marriage Act (“DOMA”) was passed into law in 1996. In 2013, the U.S. Supreme Court struck down Section 3 of the law which prevented the federal government from recognizing any marriage between same-sex couples for the purpose of federal laws or programs, even if the couple was considered legally married under the laws of their home state. The other significant part of DOMA, Section 2, allows individual states that do not recognize same-sex marriage to disregard the status of same-sex couples that were legally married in another state. Section 2 remains in effect.

The Court’s ruling impacts many legal rights and benefits including: health insurance and pension protections for federal employees, Social Security benefits, military benefits, immigration issues, and taxation.

From an income tax standpoint, same-sex married couples will be required to file married filing jointly or married filing separately federal returns. Filing status impacts numerous parts of the return including tax rates, the calculation of taxable Social Security benefits, and many deductions and credits.

Estate and gift tax matters are also impacted by the ruling. Most transfers between legally married spouses qualify for the marital deduction for gift and estate tax purposes. In addition, an estate tax portability election must be considered for every decedent with a surviving spouse.

Many opportunities exist to advise clients with respect to these issues and more. Advisors must have an understanding of the law and identify the situations that will impact their clients. Helping a client navigate the maze of federal and state laws that are affected by this ruling could prove invaluable.

Baker Newman Noyes previously published a series of articles explaining the taxation issues related to DOMA. Please visit our website for the following articles:

If you have any questions, please contact Jean McDevitt at 1-800-244-7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.

IRS CIRCULAR 230 DISCLOSURE:
Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachment) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter. Please contact us if you wish to have formal written advice on this matter.