Constitutional Law

Despite DOMA win, some same-sex couples see a tax-related downside; others get estate tax refunds


As the dust settles after a celebration of the U.S. Supreme Court’s decision that a federal law restricting the rights of same-sex married couples is unconstitutional, some are now facing new tax issues.

While the court’s decision to strike the Defense of Marriage Act is expected to result in hefty savings as far as estate tax is concerned, dual-income couples making big bucks likely may have to pay higher income tax. And, especially for those in states that do not recognize the marriages of same-sex couples, simply dealing with the uncertainty created by the ruling, at least until it is clarified by tax officials, will also be a headache, according to Reuters and the Wall Street Journal (sub. req.).

Jeremy Turpen is married to another man in California, which recognizes such unions. However, his spouse gets business income from Florida, which doesn’t. How should it be reported, for tax purposes? The answer simply isn’t clear, even to certified public accountants.

“I could talk to three different CPAs and get three different answers,” Turpen told Reuters. “That’s not equality under the law from a financial perspective.”

However, in New York, a same-sex spouse who is still within the statute of limitations period to amend an estate tax return may apply for a refund of tax that would not have been due from an opposite-sex surviving spouse, the Staten Island Advance reports.

As a result of the recent U.S. Supreme Court decision in the DOMA case, “New York state is now able to issue refund checks to qualified same-sex spouses who were required to pay taxes for no reason other than their sexual orientation,” said Gov. Andrew Cuomo in a written statement announcing the new estate tax refund policy. “This financial compensation is one more step toward justice for Edie Windsor, and all of the men and women who confronted similar indifference at a time of deep personal loss.”

Windsor was the named plaintiff in the DOMA case, which was filed over estate tax she had to pay in New York.

See also:

ABAJournal.com: “DOMA ruling may benefit gays seeking divorces”

Fresno Bee (sub. req.): “CalPERS will start coverage of gay marriage spouses”

Forbes: “The Same Sex State Death Tax Trap Post DOMA”

Minnesota Public Radio: “Minn. tax agency awaits guidance on same-sex marriage”

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