Among other things, taxes just got easier for same-sex couples
The Supreme Court’s ruling on marriage Wednesday paves the way for married gay couples to receive more than a thousand federal benefits and protections their straight counterparts already have access to, ranging from survivor benefits to a path to citizenship.
The ruling applies to all married couples in Massachusetts, as well as the 11 other states and the District of Columbia where gay marriage is legal.
“This is enormous,” said Arline Isaacson, cochair of the Massachusetts Gay and Lesbian Political Caucus. “The right to marry is not only critical socially and societally, but it also has huge economic implications.”
The ruling on the Defense of Marriage Act will also change the way companies handle employee benefits, such as health care and family leave, as well as hiring and new employee orientation practices.
“Striking down DOMA gets rid of a lot of distractions,” said Tracy Burns, executive director of the Northeast Human Resources Association. Before the ruling, human resources staff had to navigate the intricacies of the differences between benefits for straight and gay married employees, added Burns.
The extension of benefits to same-sex married couples takes effect immediately, according to human resources consulting firm Mercer, though it may take some time for employers to amend and update various tax and benefit forms.
Most notably, gay spouses will be able to file a joint federal tax return; before, same-sex married couples in Massachusetts could file state income tax forms jointly and but then had to file separately as single individuals for their federal tax returns.
“It’s been very complicated. We basically file four times every year,” said Renee Farster-Degenhardt, who lives in Lynn with her wife, Nathalie. “Just considering the logistics of it all and the basic privileges people take for granted — we could get some of them, but we’d have to take 10 extra steps.”
Experts say the ruling will generally save money for same-sex married couples; while some may end up paying more in federal income taxes when filing jointly, they will save in other instances such as on estate taxes.
For companies, the court ruling might mean a retroactive tax refund in states where gay marriage is legal, according to James Klein, president of the American Benefits Council. That’s because some companies have paid additional federal payroll taxes to make up the difference in the cost of health care for married gay employees.
Scott Squillace, an estate planning lawyer at Squillace & Associates in the Back Bay, which has approximately 350 gay couples as clients, and Christopher Paul, an estate planning lawyer with New Hampshire’s McLane Law Firm, outlined some of the larger benefits married same-sex couples will now be able to receive:
Military benefits: Though the US military has repealed “Don’t Ask, Don’t Tell” and promised to give 20 benefits to same-sex couples as early as August, all benefits now granted to opposite-sex military spouses will also apply to same-sex spouses as well. Additionally, spouses of deceased veterans will be eligible to receive veteran’s benefits. Other benefits include spousal coverage under health care plans and housing allowances for gay married couples.
Social Security survivor benefits: If a spouse dies, the surviving spouse can now collect the deceased spouse’s Social Security checks if that amount is higher than what he or she was receiving.
Federal estate tax break: An unlimited marital deduction now applies on both the state and federal level, meaning that if one spouse wanted to leave all possessions and assets to the living spouse, he or she would be able to do so without that amount being taxed. Previously, the federal estate tax was 40 percent on any estate valued at more than $5.25 million. The Supreme Court case centered around a widow’s right to the estate tax break after the death of her female spouse.
Property sales: If one spouse sells land to another, capital gains taxes will not apply.
Retirement plan rollover: A deceased spouse’s individual retirement account can roll over into the survivor’s account without being taxed first.
Federal health care protections: Same-sex married couples and their children will now be eligible to receive health care coverage under COBRA, which allows some workers to receive temporary health care after leaving a company. Spousal benefits in Medicare will also apply.
Federal employee benefits: For federal employees, the government will recognize gay spouses, making them eligible for a variety of benefits such as health care and reimbursement under the Federal Employees Health Benefits Program. Gay married federal employees can also participate in family medical leaves.
US citizenship: Spouses who are citizens can now sponsor a visa for a spouse who is not a citizen, and the foreign national can receive spousal preference for a path to citizenship.