What same-sex marriage means for your money
The federal rules that provide a multitude of benefits to married couples will soon be extended to same-sex marriages. Here's what to expect.
This post comes from Angela Colley at partner site Money Talks News.
Married same-sex couples in a dozen states and the District of Columbia will now be eligible for more than 1,000 spousal benefits previously off limits under [the Defense of Marriage Act]. And the court's other decision on Wednesday, striking down California's Prop 8, paves the way for same-sex marriages to resume in that state.
More than 130,000 married same-sex couples will be affected, Bankrate says.
The changes apply to federal laws and regulations affecting married couples. Among them:
1. Tax filing status changes
Married same-sex couples will be able to jointly file federal taxes, just as married heterosexual couples can. This is a mixed blessing. If one spouse earns much more than the other, filing jointly can reduce an income tax bill. If spouses earn similar amounts, however, it can increase it.
Ask your accountant if you can amend your taxes for the last three years to take advantage of this change.
2. Estate taxes and survivor benefits
The lawsuit that resulted in Wednesday's decision resulted from an inheritance case. The New York Times explains:
The case concerned two New York City women, Edith Windsor and Thea Clara Spyer, who married in 2007 in Canada. Ms. Spyer died in 2009, and Ms. Windsor inherited her property. The 1996 law did not allow the Internal Revenue Service to treat Ms. Windsor as a surviving spouse, and she faced a tax bill of about $360,000 that a spouse in an opposite-sex marriage would not have had to pay. Ms. Windsor sued … .
Also, same-sex spouses will be entitled to the same Social Security benefits that straight spouses have received, including survivor benefits.
3. Health insurance
A worker will be able to include a same-sex spouse on a health insurance plan without having to pay taxes on the benefit. Also, a same-sex spouse will be eligible for a partner's COBRA benefit.
4. Other job benefits
The benefits extended to straight spouses of federal employees and veterans will now be available to same-sex spouses.
5. Medicare changes
A partner in a same-sex marriage will now be able to delay enrollment in Medicare if that person is carried on the spouse's health insurance plan. Also, same-sex couples may see their premiums for Medicare go down if they file a joint tax return. Under the rules in place before the court ruling, Bankrate explains:
For instance, a same-sex married couple with one working spouse making $100,000 a year will pay $504 more in yearly Medicare premiums than a straight married couple, according to calculations based on Medicare's Part B premiums.
6. IRA benefits for nonworking spouses
Previously, a worker in a same-sex marriage couldn't fund an IRA for a nonworking spouse.
Same-sex married couples will be able to convey assets to each other without paying a gift tax. That will also apply to division of property in divorce.
A citizen will be able to sponsor a same-sex spouse who is not a U.S. citizen for a green card. Also, "If you're a foreigner with a work visa to come to the U.S., you can often bring your foreign spouse along, and if you marry an American, that usually makes you eligible to immigrate," Business Insider says.
These changes won't happen overnight. New regulations will have to be written. NPR explained some of the complications involved:
Some federal agencies adhere to what is known as a "place of celebration" standard. That means no matter where a couple is legally married anywhere in the world, the union is recognized for the purpose of federal benefits.
But other agencies, including the Internal Revenue Service and the Social Security Administration, hew to a "place of residence" standard. Marriage has to be recognized in the place the couple is living for them to be eligible for those federal spousal benefits.
But it's clear that many married same-sex couples will soon be enjoying the benefits of federal law that their straight counterparts have been entitled to for years.
Should same-sex couples have the same financial rights and obligations as other married couples?
More on Money Talks News:
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