On June 26, 2015 the Supreme Court of the United States ruled on the Obergefell case. This decision mandates that same-sex marriages must be recognized in all states. Now that there has been enough time passed to let the dust settle, the actual impact of the law can be looked at on a tax and benefit level.
State Income Tax - Prior to the decision same-sex couples in Georgia had to file separate single returns for their Georgia returns. It did not matter if they were legally married in another state, Georgia refused to grant married status to same-sex couples. This made tax preparation much more complicated and cumbersome for couples that were considered married Federally, but single by definition to the state. A joint return would be prepared for the IRS, but all items had to be allocated to separate individual state returns.
Open years prior to the Obergefell ruling can be amended in Georgia.
According to the Georgia Department of Revenue:
A lawfully married same-sex couple filed Georgia income tax returns as though they were not married, or had their Georgia income tax returns adjusted by the Revenue Department based on treating them as not married, those persons may file amended Georgia income tax returns under the rules that applied for the tax years in question to lawfully married opposite-sex couples. Whether a refund claimed on such an amended return can be paid will depend on the statute of limitations, which requires that such a claim be filed within three years of the later of the date of payment of the tax to the Revenue Department or the due date (including any extensions granted) for filing the original return for that period.
This will not be a big tax savings opportunity for most since Georgia does not have a progressive tax rate, but it is something that should be investigated.
Social Security Benefits - Another huge item that came from the ruling is the treatment of same-sex spouses for social security spousal and survivor benefits. Before June 26, Georgia did not recognize same-sex unions, today the surviving partner is eligible for these benefits. While the Social Security Administration has not officially announced that it will retroactively approve benefits, there are some encouraging signs on an individual case level that it will approve them.
Estate and Gift Taxes – The marital exclusion and other estate/gift tax benefits that were dependent on state of residency recognition are now fully available regardless of domicile or gender. These benefits include:
· Unlimited marital deduction for gifts or transfers at death.
· The ability to gift-split
· Eligibility for QTIP trusts
· Transfer of remaining lifetime exclusion to remaining spouse.
This area is far too broad to get into details on a simple blog post, contact us if you need to dig deeper into this.
Non-Tax Related items – There are also some items that have been affected that are not directly tax related, but they are definitely items to consider.
· Health Insurance – Family coverage is available regardless of where you live.
· Employee Benefits – While private employers are not required by the recent decision to provide equal benefits, the employer will be opening themselves up to litigation if they do not recognize same-sex marriages.
· Retirement Plans – All retirement plans and the laws governing them are now required to treat all married couples the same. This includes RMD’s, Hardship distribution calculations, etc.
While Atlanta may be on the top 10 cities in size of the LGBT Community, the state of Georgia was one of the holdouts in recognizing same-sex marriage. Now that the court has ruled, make sure that marriage equality is being fully implemented.
Source Thomson Reuters
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