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Effective September, 16, 2013, The Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA), with Revenue Ruling 2013-17. The IRS now recognizes as married, those same-sex spouses who are legally married according to their state or foreign law.
Now you, the new group of married taxpayers, will want to study how this current ruling will impact your returns for 2013; and also, prior year’s returns (assuming those years are still open for amendment). The rule for filing an amended return is generally, three years from the date the return was filed (think April 15 due date, not a date filed earlier in the year), or two years from the date the tax was paid (late filing dates).
Interestingly, for 2013, you, as same-sex spouses, will generally need to file as Married Filing Jointly (MFJ) or Married Filing Separately (MFS) according the best tax outcome that results from you and your spouse’s specific sets of income, adjustments, deductions and credits. But for 2012 and other open past years, Rev. Rul. 2013-17 does not require amended returns just because you were legally married in 2012 or earlier. Otherwise amended returns are optional, so if your single filing statuses in prior years yield a better tax result, you do not have to amend your returns just because of Rev. Rul. 2013-17.
When amending prior years returns, in most cases, the only benefit with filing the amended joint return might result in a lower joint tax liability because of the lower joint tax rates in effect rather than the single tax rate that was imposed on the two single returns… but, the opposite can also be true, when combining two single returns, the combined taxable income might result in a higher tax rate bracket and therefore a larger tax liability. One of the best reasons to an amended return for a prior year would be when one spouse was covered by the other spouse’s health insurance and that portion of the healthcare cost was included in taxable wages. As a married couple, those joint healthcare expenses would be excluded from gross income under §106 and could result in a relatively large refund. Overpaid FICA taxes on the excludable healthcare costs could also be included in this scenario. Should there be overpaid FICA taxes, they would be recovered from the employer through a direct reimbursement or reduction of future employee FICA taxes, not the IRS (see Notice 2013-61).
In summary, you have the time now to think about you and your spouse’s tax opportunities given Rev. Rul. 2013-17, and should begin a conversation with your tax advisor on how this ruling can best impact the filing status for you and your spouse in 2013 and prior open years. As of this writing, the IRS has not given specific guidelines on how to join the two filed single returns into one amended joint return, so stay alert and certainly check with a qualified tax preparer to understand what options are best for you and your spouse.