Planning for Same Sex Couples 


    How DOMA’s Strike Down Impacts Planning

    In June 2013, the Supreme Court issued rulings on the constitutionality of the Defense of Marriage Act and on California’s Proposition 8. As a result of these rulings, and ongoing changes in many states allowing same sex marriages, the preparation of a sound and integrated financial plan has become more complex. 

    Presently, the resources available are limited and continually changing. Please revisit the sources because they change frequently. Below captures the content available to date from the AICPA PFP and Tax Sections to help you advise your relevant clients in the wake of the DOMA decision:

    Stay tuned for a follow up webcast from Tom Tillery and Jonathan Horn to be announced via the weekly PFP News once we have more information and guidance.

    BACKGROUND

    The decision impacts a number of issues, from Social Security benefits, to retirement planning, to income and estate taxes. CPA financial planners and tax practitioners need to be prepared to advise their relevant clients on the financial planning and tax implications facing same sex couples.

    In August 2013, the Treasury Department and IRS announced that “same sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes.” The IRS also issued a revenue ruling (Rev. Rul. 2013-17) and FAQs providing guidance on the topic. Read more about this announcement and its implications from Journal of Accountancy.

    In September, the IRS announced in Notice 2013-61 the procedures employers should follow for filing refund claims for overpaid Federal Insurance Contributions Act (FICA) and income taxes paid on employer-provided benefits for same-sex spouses that are now tax free. The notice provides two streamlined administrative procedures for making adjustments or claiming refunds, and applies to 2013 benefits. The notice also describes what employers can do for overpaid benefits from prior years. Read more about Notice 2013-61 from Journal of Accountancy.

    In August, the Social Security Administration posted the following statement: “In the coming weeks and months, we will work with the Department of Justice to develop and implement additional policy and processing instructions. If you believe you may be eligible for Social Security benefits, we encourage you to apply now to protect you against the loss of any potential benefits. We will process claims as soon as additional instructions become finalized. The Social Security benefits are determined by where you were ‘"domiciled when you filed for benefits.’"

    Further, the Department of Labor ruled in September that same-sex married couples are to be included in ERISA and other employee benefit laws over which the department has jurisdiction, regardless of where an employee or his or her same-sex spouse reside.

     




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