How does the Supreme Court’s DOMA decision affect my taxes? Part I

The Supreme Court’s DOMA Decision came as a huge step for civil rights.

Now the definition of marriage is being passed onto the states. If you are a same-sex couple married in a state that recognizes same-sex marriage (and live in that state), you are now considered married by the federal government.

What changes at tax time?

If you find yourself living in any of the states that recognize same-sex marriage, you will be required to file your taxes married filing joint (or separate) for 2013. The following states have approved same-sex marriage: Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington. Washington D.C. has also approved same-sex marriage.

Being able to file married-filing-joint will place individuals in a different tax structure. If one individual has more income than another, it is likely there will be some savings in the new structure. There will also be more chances for deductions. Now, the taxpayer is allowed to deduct medical and education expenses paid on behalf of a same-sex spouse whereas these expenses were previously disallowed. If the taxpayer is supporting a spouse through college, the American Opportunity or Lifetime Learning credits can be taken advantage of. Now, contributions into a spouses IRA can be made, and can be considered deductible, even if only one spouse has earned income as long as all the prior requirements hold.

However, these changes are just the tip of the iceberg. There are now retroactivity considerations, the marriage penalty, and other benefits that must be considered.

Coming soon… how retroactivity and its implications could affect your tax situation.

Davis & Hodgdon Associates has been assisting businesses and individuals in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].

Alyssa McBride, Associate Accountant

Davis & Hodgdon Associates CPAs