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US Confirms Further Tax Benefits For Same-Sex Married Couples

by Mike Godfrey, Tax-News.com, Washington

20 December 2013


The Treasury and Internal Revenue Service (IRS) have issued a further notice following the Supreme Court's decision last June in United States v. Windsor (No. 12-307), which invalidated a key provision of the Defense of Marriage Act.

The Supreme Court determined that same-sex couples should be given all of the federal tax benefits that are extended to heterosexual married couples. On June 26, 2013, it declared unconstitutional Section 3 of the 1996 Defense of Marriage Act, which had prevented the Federal Government from recognizing any marriage except that between a man and a woman.

Subsequently, in August this year, Treasury and the IRS issued a ruling that same sex couples will be treated as married for 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 a retirement account and claiming the earned income tax credit or child tax credit.

In a follow-up notice, it has now been decided that the tax rules for cafeteria plans, which allow employees to choose from a menu of tax-free benefit options and cash or taxable benefits, also apply to individuals with same-sex spouses.

As taxpayers must make pre-tax elections under a cafeteria plan before the beginning of the plan year and cannot change their elections until the following year, and the Windsor decision was issued mid-year, the new notice permits changes to elections for same-sex married couples during the plan year that includes the date of the Windsor decision.

Sponsors of cafeteria plans can now permit employees to choose to enroll same-sex spouses in health coverage in the middle of a plan year, even though mid-year enrollments would otherwise be prohibited.

TAGS: individuals | tax | employees | tax credits | Internal Revenue Service (IRS) | ministry of finance | tax authority | United States | tax breaks | individual income tax

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