November 20, 2014
Who would have thunk it? Not so long ago it seemed like South Carolina would be the last state in the union to recognize or allow same sex marriage. Now it won’t be long before we wonder what all the fuss was about.
According to news reports, the first same sex marriage in South Carolina occurred Wednesday morning in Charleston. And now it is off to the races with the US Supreme Court declining to intervene in an appeal from the the state to stop same sex marriage.
We congratulate all those same sex couples who are now able to obtain the protections and benefits afforded under the law to married couples. However, we also caution you that marriage is a two sided sword and can just as easily work against you if the marriage dissolves. So go in with your eyes open and learn to protect yourselves.
Marriage opens up a long list of options not available to unmarried individuals from hospital visitation to social security benefits to estate planning. So regardless of your particular perspective, we look forward to helping the good people of South Carolina sift through their options as the newly acquired constitutional rights of same sex couples are now allowed to coexist in harmony with the rights of everyone else. Please feel free to call us at 803 732-4288 if we can be of assistance to you.
October 6, 2014
The United States Supreme Court announced today that it has declined to intervene in a few same sex marriage cases that came before it.
The supreme court’s refusal to hear the state of Virginia’s appeal of a court ruling allowing same sex marriages means Virginia must recognize same sex marriage. Since South Carolina is in the same circuit and bound by the same rulings does this mean same sex marriage in South Carolina is now likely to be confirmed in short order.
We will have to wait for the legal scholars to weigh in on this case but it sure looks like same sex marriage has arrived in South Carolina. And if so, does that mean South Carolina taxpayers who are in a same sex marriage may now file joint tax returns for South Carolina tax purposes.
You may recall that the South Carolina Department of Revenue promulgated procedures for same sex couples who are in federally recognized same sex marriages, and therefore able to file a joint federal tax return, to bifurcate their tax returns for state taxation purposes thereby removing the joint filing status for state purposes. It now appears to me that this procedure is no longer constitutionally kosher.
Stay tuned!
Social Security has published new instructions that allow the agency to process more claims in which entitlement or eligibility is affected by a same-sex relationship. These instructions come in response to last year’s Supreme Court decision in U.S. vs. Windsor, which found Section 3 of the Defense of Marriage Act unconstitutional.
This latest policy development lets the agency recognize some non-marital legal relationships as marriages for determining entitlement to benefits. These instructions also allow Social Security to begin processing many claims in states that do not recognize same-sex marriages or non-marital legal relationships. We have consulted with the Department of Justice and determined that the Social Security Act requires the agency to follow state law in Social Security cases. The new policy also addresses Supplemental Security Income claims based on same-sex relationships.
“As with previous same-sex marriage policies, we worked closely with the Department of Justice,” said Carolyn W. Colvin, Acting Commissioner of Social Security. “We are bound by the law within the Social Security Act, and we have to respect state laws. We remain committed to treating all Americans fairly, with dignity, and respect.”
If a person believes he or she may be entitled to or eligible for benefits, they are encouraged to apply now.
To learn more, please visit www.socialsecurity.gov/same-sexcouples.
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In a draft ruling today, the state of South Carolina reaffirmed it’s intention to not recognize same sex marriages. The preliminary draft ruling can be found here (PDF).
A marriage between one man and one woman is the only lawful domestic union that shall be valid or recognized in this state.
Since South Carolina tax calculations begin with federal taxable income, same sex spouses are presented with a bit of a dilemma when filing the state return. The state proceeds to provide guidance to those persons who qualify to file jointly for federal purposes but cannot file a joint South Carolina return.
Basically those persons are instructed to file the federal tax return in any way for which they are eligible to file for federal purposes, for example married filing jointly. Then those persons are instructed to create a second pro forma federal tax return to calculate each spouses share of income and deductions. This second pro forma return will not be filed with the federal government, but instead will be attached to the state return or retained as a worksheet to substantiate the entries on the state return.
Which all seems reasonably straight forward given the circumstances.
The question I have is how can the state survive a challenge to the constitutionality of this particular provision in light of the fact that the Defense of Marriage Act, which prohibited same sex marriages at the federal level, has fallen to constitutional defeat?
I guess we will all just have to stay tuned to find out.
WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.
The ruling implements federal tax aspects of the June 26 Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act.
Under the ruling, same-sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to 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 an IRA and claiming the earned income tax credit or child tax credit.
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law.
Legally-married same-sex couples generally must file their 2013 federal income tax return using either the married filing jointly or married filing separately filing status.
Individuals who were in same-sex marriages may, but are not required to, file original or amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.
Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011 and 2012. Some taxpayers may have special circumstances, such as signing an agreement with the IRS to keep the statute of limitations open, that permit them to file refund claims for tax years 2009 and earlier.
Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.
How to File a Claim for Refund
Taxpayers who wish to file a refund claim for income taxes should use Form 1040X, Amended U.S. Individual Income Tax Return.
Taxpayers who wish to file a refund claim for gift or estate taxes should file Form 843, Claim for Refund and Request for Abatement. For information on filing an amended return, see Tax Topic 308, Amended Returns, available on IRS.gov, or the Instructions to Forms 1040X and 843. Information on where to file your amended returns is available in the instructions to the form.
Future Guidance
Treasury and the IRS intend to issue streamlined procedures for employers who wish to file refund claims for payroll taxes paid on previously-taxed health insurance and fringe benefits provided to same-sex spouses. Treasury and IRS also intend to issue further guidance on cafeteria plans and on how qualified retirement plans and other tax-favored arrangements should treat same-sex spouses for periods before the effective date of this Revenue Ruling.
Other agencies may provide guidance on other federal programs that they administer that are affected by the Code.
Revenue Ruling 2013-17, along with updated Frequently Asked Questions for same-sex couples and updated FAQs for registered domestic partners and individuals in civil unions, are available today on IRS.gov. See also Publication 555, Community Property.
Treasury and the IRS will begin applying the terms of Revenue Ruling 2013-17 on Sept. 16, 2013, but taxpayers who wish to rely on the terms of the Revenue Ruling for earlier periods may choose to do so, as long as the statute of limitations for the earlier period has not expired.
This appears to be a full and total capitulation by the government in recognizing single gender marriages going forward and for a limited amount of time retroactively. If this ruling applies to you, it is imperative that you move quickly to claim any benefits you are entitled to by filing an amended return. Please contact Tax On Wheels, LLC at 803 732-4288 if you need assistance with filing your amendment.
According to news sources, the IRS has decided to recognize same sex marriages no differently than heterosexual marriages, regardless of whether the couple’s state of residence recognizes the marriage. This will open up many benefits (and many disadvantages) for single gender couples, for example the ability to file married filing jointly and married filing seperately.
I am sure there will be plenty more about this later so stay tuned.