State tax issues
For couples who got married in a state where same-sex marriage is legal but who now live in a state that does not recognize it, tax time can be particularly complicated. They may find themselves filing one federal tax return as a married couple filing jointly and two separate state returns as individuals. For these couples, it’s important to understand the tax laws on same-sex marriage in their home state and how they may affect them.
Reconsider estate planning
The Supreme Court case that recognized same-sex marriage at the federal level was actually a tax case brought by a woman who had to pay hundreds of thousands of dollars in estate taxes when her spouse died, money she would not have owed if she had been part of a heterosexual married couple. Estate planning is an important consideration for any couple, and legally married same-sex couples should be aware of new opportunities on this front, particularly those who have accumulated valuable assets. Each spouse can now inherit an unlimited amount from the other tax free, like any other married couple.
Think about home and health
In planning your future together, it’s important to take into account some of the other advantages of marriage. For example, owning investments jointly as a married couple gets easier and reaping the benefits of homeownership is less complicated because couples can take the mortgage deduction together on a joint return instead of splitting it between two individual returns. They can also qualify together to take the home sale exclusion, which allows them to avoid taxes on up to $500,000 of gain on the sale of their principal residence. Other advantages include the potential to qualify for spousal health insurance and to avoid extra taxes for it.
About Post Author
