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Answers to Frequently Asked Questions for Individuals
of the Same Sex Who Are Married Under State Law
The following questions and answers
provide information to individuals of the same sex who are lawfully married
(same-sex spouses). These questions and answers reflect the holdings in Revenue Ruling 2013-17
in 2013-38 IRB 201.
Q1. When are individuals of the
same sex lawfully married for federal tax purposes?
A1. For federal tax purposes,
the IRS looks to state or foreign law to determine whether individuals are
married. The IRS has a general rule recognizing a marriage of same-sex
spouses that was validly entered into in a domestic or foreign jurisdiction
whose laws authorize the marriage of two individuals of the same sex even if
the married couple resides in a domestic or foreign jurisdiction that does not
recognize the validity of same-sex marriages.
Q2. Can same-sex spouses file
federal tax returns using a married filing jointly or married filing separately
status?
A2. Yes. For tax year 2013
and going forward, same-sex spouses generally must file using a married filing
separately or jointly filing status. For tax year 2012 and all prior
years, same-sex spouses who file an original tax return on or after Sept. 16,
2013 (the effective date of Rev. Rul. 2013-17), generally must file using a
married filing separately or jointly filing status. For tax year 2012, same-sex
spouses who filed their tax return before Sept. 16, 2013, may choose (but are
not required) to amend their federal tax returns to file using married filing
separately or jointly filing status. For tax years 2011 and earlier,
same-sex spouses who filed their tax returns timely may choose (but are not
required) to amend their federal tax returns to file using married filing
separately or jointly filing status provided the period of limitations for
amending the return has not expired. A taxpayer generally may file a claim
for refund for three years from the date the return was filed or two years from
the date the tax was paid, whichever is later. For information on filing
an amended return, go to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html.
Q3. Can a taxpayer and his or
her same-sex spouse file a joint return if they were married in a state that
recognizes same-sex marriages but they live in a state that does not recognize
their marriage?
A3. Yes. For federal tax
purposes, the Service has a general rule recognizing a marriage of same-sex
individuals that was validly entered into in a domestic or foreign jurisdiction
whose laws authorize the marriage of two individuals of the same sex even if
the married couple resides in a domestic or foreign jurisdiction that does not
recognize the validity of same-sex marriages. The rules for using a
married filing jointly or married filing separately status described in Q&A
#2 apply to these married individuals.
Q4. Can a taxpayer’s same-sex spouse
be a dependent of the taxpayer?
A4. No. A taxpayer’s
spouse cannot be a dependent of the taxpayer.
Q5. Can a same-sex spouse file using
head of household filing status?
A5. A taxpayer who is married
cannot file using head of household filing status. However, a married
taxpayer may be considered unmarried and may use the head-of-household filing
status if the taxpayer lives apart from his or her spouse for the last 6 months
of the taxable year and provides more than half the cost of maintaining a
household that is the principal place of abode of the taxpayer’s dependent
child for more than half of the year. See Publication 501 for more
details.
Q6. If same-sex spouses (who
file using the married filing separately status) have a child, which parent may
claim the child as a dependent?
A6. If a child is a qualifying
child under section 152(c) of both parents who are spouses (who file using the
married filing separate status), either parent, but not both, may claim a dependency
deduction for the qualifying child. If both parents claim a dependency
deduction for the child on their income tax returns, the IRS will treat the
child as the qualifying child of the parent with whom the child resides for the
longer period of time during the taxable year. If the child resides with
each parent for the same amount of time during the taxable year, the IRS will
treat the child as the qualifying child of the parent with the higher adjusted
gross income.
Q7. Can a taxpayer who is married to
a person of the same sex claim the standard deduction if the taxpayer’s spouse
itemized deductions?
A7. No. If a taxpayer’s spouse itemized his or her deductions, the taxpayer cannot claim the standard deduction (section 63(c)(6)(A)).
A7. No. If a taxpayer’s spouse itemized his or her deductions, the taxpayer cannot claim the standard deduction (section 63(c)(6)(A)).
Q8. If a taxpayer adopts the child
of his or her same-sex spouse as a second parent or co-parent, may the taxpayer
(“adopting parent”) claim the adoption credit for the qualifying adoption
expenses he or she pays or incurs to adopt the child?
A8. No. The adopting parent
may not claim an adoption credit. A taxpayer may not claim an adoption
credit for expenses incurred in adopting the child of the taxpayer’s spouse
(section 23).
Q9. Do provisions of the
federal tax law such as section 66 (treatment of community income) and section
469(i)(5) ($25,000 offset for passive activity losses for
rental real estate activities) apply to same-sex spouses?
A9. Yes. Like other
provisions of the federal tax law that apply to married taxpayers, section 66
and section 469(i)(5) apply to same-sex spouses because same-sex spouses are
married for all federal tax purposes.
Q10. If an employer provided health
coverage for an employee’s same-sex spouse and included the value of that
coverage in the employee’s gross income, can the employee file an amended Form
1040 reflecting the employee’s status as a married individual to recover
federal income tax paid on the value of the health coverage of the employee’s
spouse?
A10. Yes, for all years for which
the period of limitations for filing a claim for refund is
open. Generally, a taxpayer may file a claim for refund for three years
from the date the return was filed or two years from the date the tax was paid,
whichever is later. If an employer provided health coverage for an
employee’s same-sex spouse, the employee may claim a refund of income taxes
paid on the value of coverage that would have been excluded from income had the
employee’s spouse been recognized as the employee’s legal spouse for tax
purposes. This claim for a refund generally would be made through the
filing of an amended Form 1040. For information on filing an amended
return, go to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html.
For a discussion regarding refunds
of social security and Medicare taxes, see Q&A #12.
Example. Employer sponsors a group health plan covering
eligible employees and their dependents and spouses (including same-sex
spouses). Fifty percent of the cost of health coverage elected by employees is
paid by Employer. Employee A was married to same-sex Spouse B at all times
during 2012. Employee A elected coverage for Spouse B through Employer’s
group health plan beginning Jan. 1, 2012. The value of the employer-funded
portion of Spouse B’s health coverage was $250 per month.
The amount in Box 1, “Wages, tips,
other compensation,” of the 2012 Form W-2 provided by Employer to Employee A
included $3,000 ($250 per month x 12 months) of income reflecting the value of
employer-funded health coverage provided to Spouse B. Employee A filed
Form 1040 for the 2012 taxable year reflecting the Box 1 amount reported on
Form W-2.
Employee A may file an amended Form
1040 for the 2012 taxable year excluding the value of Spouse B’s
employer-funded health coverage ($3,000) from gross income.
Q11. If an employer sponsored a
cafeteria plan that allowed employees to pay premiums for health coverage on a
pre-tax basis, can a participating employee file an amended return to recover
income taxes paid on premiums that the employee paid on an after-tax basis for
the health coverage of the employee’s same-sex spouse?
A11. Yes, for all years for
which the period of limitations for filing a claim for refund is
open. Generally, a taxpayer may file a claim for refund for three years
from the date the return was filed or two years from the date the tax was paid,
whichever is later. If an employer sponsored a cafeteria plan under which
an employee elected to pay for health coverage for the employee on a pre-tax basis,
and if the employee purchased coverage on an after-tax basis for the employee’s
same-sex spouse under the employer’s health plan, the employee may claim a
refund of income taxes paid on the premiums for the coverage of the employee’s
spouse. This claim for a refund generally would be made through the filing
of an amended Form 1040. For information on filing an amended return, go
to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html. For a discussion regarding refunds of social security
and Medicare taxes, see Q&A #12.
Example. Employer sponsors a group health plan as part of a
cafeteria plan with a calendar year plan year. The full cost of spousal
and dependent coverage is paid by the employees. In the open enrollment
period for the 2012 plan year, Employee C elected to purchase self-only health
coverage through salary reduction under Employer’s cafeteria plan. On
March 1, 2012, Employee C was married to same-sex spouse D. Employee C
purchased health coverage for Spouse D through Employer’s group health plan
beginning March 1, 2012. The premium paid by Employee C for Spouse D’s
health coverage was $500 per month.
The amount in Box 1, “Wages, tips,
other compensation,” of the 2012 Form W-2 provided by Employer to Employee C
included the $5,000 ($500 per month x 10 months) of premiums paid by Employee C
for Spouse D’s health coverage. Employee C filed Form 1040 for the 2012
taxable year reflecting the Box 1 amount reported on Form W-2.
Employee C’s salary reduction
election is treated as including the value of the same-sex spousal coverage
purchased for Spouse D. Employee C may file an amended Form 1040 for the
2012 taxable year excluding the premiums paid for Spouse D’s health coverage ($5,000)
from gross income.
Q12. In the situations
described in FAQ #10 and FAQ #11, may the employer claim a refund for the
social security taxes and Medicare taxes paid on the benefits?
A12. Yes. If the period of
limitations for filing a claim for refund is open, the employer may
claim a refund of, or make an adjustment for, any excess social security
taxes and Medicare taxes paid. The requirements for filing a claim
for refund or for making an adjustment for an overpayment of the
employer and employee portions of social security and Medicare taxes can be
found in the Instructions for Form 941-X, Adjusted Employer’s Quarterly Federal
Tax Return or Claim for Refund. A special administrative procedure
for employers to file claims for refunds or make adjustments for excess social
security taxes and Medicare taxes paid on same-sex spouse benefits will be
provided in forthcoming guidance to be issued by the IRS in the near
future.
Q13. In the situations
described in Q&A #10 and Q&A #11, may the employer claim a refund or
make an adjustment of income tax withholding that was withheld from the
employee with respect to the benefits in prior years?
A13. No. Claims for refunds of
overwithheld income tax for prior years cannot be made by
employers. The employee may file for any refund of income tax due for
prior years on Form 1040X, provided the period of limitations for claiming a
refund has not expired. See Q&A #10 and Q&A #11. Employers
may make adjustments for income tax withholding that was overwithheld from an
employee in the current year provided the employer has repaid or
reimbursed the employee for the overwithheld income tax before the end of
the calendar year.
Q14. If an employer cannot
locate a former employee with a same-sex spouse who received the benefits
described in Q&A #10 and Q&A #11, may the employer still claim a
refund of the employer portion of the social security and Medicare taxes
on the benefits?
A14. Yes, if the employer
makes reasonable attempts to locate an employee who received the benefits
described in Q&A #10 and Q&A #11 that were treated as wages but the
employer is unable to locate the employee, the employer can claim a refund of
the employer portion of Social Security and Medicare taxes, but not the
employee portion. Also, if an employee is notified and given the
opportunity to participate in the claim for refund of Social Security and
Medicare taxes but declines in writing, the employer can claim a
refund of the employer portion of the taxes, but not the employee
portion. Employers can use the special administrative procedure that will
be set forth in forthcoming guidance to file these claims.
Q15. If a sole proprietor employs
his or her same-sex spouse in his or her business, can the sole proprietor get
a refund of Social Security, Medicare and FUTA taxes on the wages that the sole
proprietor paid to the same-sex spouse as an employee in the business?
A15. Services performed by an
employee in the employ of his or her spouse are excluded from the definition of
employment for purposes of the Federal Unemployment Tax Act (FUTA). Therefore,
for all years for which the period of limitations is open, the sole proprietor
can claim a refund of the FUTA tax paid on the compensation that the sole
proprietor paid his or her same-sex spouse as an employee in the business.
Services of a spouse are excluded from Social Security and Medicare taxes only
if the services are not in the course of the employer's trade or business, or
if it is domestic service in a private home of the employer.
Q16. What rules apply to
qualified retirement plans pursuant to Rev. Rul. 2013-17?
A16. Qualified retirement plans
are required to comply with the following rules pursuant to Rev. Rul. 2013-17:
1.
A qualified retirement plan must
treat a same-sex spouse as a spouse for purposes of satisfying the federal tax
laws relating to qualified retirement plans.
2.
For purposes of satisfying the
federal tax laws relating to qualified retirement plans, a qualified retirement
plan must recognize a same-sex marriage that was validly entered into in a
jurisdiction whose laws authorize the marriage, even if the married couple
lives in a domestic or foreign jurisdiction that does not recognize the
validity of same-sex marriages.
3.
A person who is in a registered
domestic partnership or civil union is not considered to be a spouse for
purposes of applying the federal tax law requirements relating to qualified
retirement plans, regardless of whether that person’s partner is of the
opposite or same sex.
Q17. What are some examples of
the consequences of these rules for qualified retirement plans?
A17. The following are some
examples of the consequences of these rules:
1.
Plan A, a qualified defined benefit
plan, is maintained by Employer X, which operates only in a state that does not
recognize same-sex marriages. Nonetheless, Plan A must treat a participant
who is married to a spouse of the same sex under the laws of a different
jurisdiction as married for purposes of applying the qualification requirements
that relate to spouses.
2.
Plan B is a qualified defined
contribution plan and provides that the participant’s account must be paid to
the participant’s spouse upon the participant’s death unless the spouse
consents to a different beneficiary. Plan B does not provide for any
annuity forms of distribution. Plan B must pay this death benefit to the
same-sex surviving spouse of any deceased participant. Plan B is not
required to provide this death benefit to a surviving registered domestic
partner of a deceased participant. However, Plan B is allowed to make a
participant’s registered domestic partner the default beneficiary who will
receive the death benefit unless the participant chooses a different beneficiary.
Q18. As of when do the rules of
Rev. Rul. 2013-17 apply to qualified retirement plans?
A18. Qualified retirement plans must
comply with these rules as of Sept. 16, 2013. Although Rev. Rul. 2013-17
allows taxpayers to file amended returns that relate to prior periods in
reliance on the rules in Rev. Rul. 2013-17 with respect to many matters, this
rule does not extend to matters relating to qualified retirement
plans. The IRS has not yet provided guidance regarding the application of Windsor
and these rules to qualified retirement plans with respect to periods before
Sept. 16, 2013.
Q19. Will the IRS issue further
guidance on how qualified retirement plans and other tax-favored retirement
arrangements must comply with Windsor and Rev. Rul. 2013-17?
A19. The IRS intends to issue
further guidance on how qualified retirement plans and other tax-favored
retirement arrangements must comply with Windsor and Rev. Rul.
2013-17. It is expected that future guidance will address the following,
among other issues:
1.
Plan amendment requirements
(including the timing of any required amendments).
2.
Any necessary corrections relating
to plan operations for periods before future guidance is issued.
Q20. Can a same-sex married couple
elect to treat a jointly owned and operated unincorporated business as a
Qualified Joint Venture?
A20. Yes. Spouses that wholly own and operate an
unincorporated business and that meet certain other requirements may avoid
Federal partnership tax treatment by electing to be a Qualified Joint Venture.
For more information on Qualified Joint Ventures, see the tax topic “Husband
and Wife Business” at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Husband-and-Wife-Business
