From filing their income taxes together to joining their spouses’ healthcare plans, same-sex married couples will for the first time handle their finances as one.
The landmark end of the Defense of Marriage Act will let same-sex couples in states that recognize the unions qualify for more than 1,000 federal benefits they were previously barred from receiving. It will depend on the couple’s financial situation as well as the state they live in, but some of the new benefits could tack on more to their yearly tax bills.
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Know that the specifics are still murky: The laws will have to be rewritten to accommodate the Supreme Court-mandated changes. But we know how some will impact same-sex couples’ finances. Here are the four most important.
Income taxes. If you’re in a same-sex marriage and one spouse makes significantly more than the other (or if one spouse doesn’t work entirely) then congratulations — you’re joint income taxes will likely decrease significantly. But bad news: If you and your spouse make similar salaries, your taxes together will grow — potentially a lot more each year if you both individually make a high enough salary. By law, know that you can get a tax refund for the past three years if you file with the IRS, which is something you would want to do if you’re in the first situation. The refund could amount to tens of thousands of dollars.
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Healthcare. Many couples will save big on health insurance, now that the law will force employers to let same-sex spouses join their partner’s healthcare plan. Although federal workers did not see these benefits, some private sector companies have already put same-sex spouses on their healthcare plan. Same-sex couples will also stop having to pay federal taxes on the value of a spouse’s health insurance coverage, which will save thousands of dollars each year.
Social Security. The decision will allow gay couples to apply for Social Security benefits based on their spouses’ earnings records and also get survivor’s benefits.
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Estate and Gift. The couples will also be exempt from the 40 percent federal estate tax on assets and transfers that add up to more than $5.25 million. The federal government lets spouses give each other unlimited money and property without tax. Under DOMA, same-sex couples would have to pay thousands in taxes because each transfer during life and after death that exceeded $14,000 would go toward that lifetime limit of $5.25 million.
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