IRS Proposes Redefinition of Terms 'Husband' and 'Wife'

Over the past five years, the definition of marriage has changed dramatically across the country. With the United States Supreme Court’s decision in United States v. Windsor (2013), a majority of the Court found Section 3 of the Clinton Administration’s Defense of Marriage Act (DOMA) unconstitutional. The effect of this decision meant that the Internal Revenue Service (IRS) had to recognize the marriages of same-sex couples that were performed in states that had legalized gay marriage. For these couples, a host of tax related benefits became available, including the ability to file joint tax returns and being treated as spouses for the purposes of transferring and inheriting property.

Yet the Windsor decision left some unanswered questions, mainly: how would the IRS treat gay couples who were legally married in one state, but then moved to a state that did not recognize gay marriage?

This past summer, the Supreme Court put an end to this dilemma with its ruling in Obergefell v. Hodges (2015). In Obergefell, the Court ruled that every state in the nation must legalize gay marriage. This means that for the first time ever, gay couples can now get married in whatever state they choose – and every state must recognize these marriages. This also means that the IRS must accord the same tax benefits to all married couples, gay or heterosexual.

For this reason, it appears the IRS tax Code will be updated by redefining the terms “spouse,” “husband” and “wife” as they are used throughout the Code. Regulation Section 301.7701-18 will be amended to read:

For federal tax purposes, the terms spouse, husband, and wife mean an individual lawfully married to another individual. The term husband and wife means two individuals lawfully married to each other. A marriage of two individuals is recognized for federal tax purposes if the marriage be recognized by any state, possession, or territory of the United States.

Interestingly enough, however, this new definition makes clear that couples—homosexual or heterosexual—who have chosen to enter into a civil union or domestic partnership as opposed to a marriage are not considered married for the purposes of federal tax benefits. The IRS has noted that many of these couples who opt not to marry do so for a variety of reasons, like retaining Social Security benefits from a previous marriage or avoiding the current tax law’s “marriage penalty.”

This presents an interesting quagmire for newly married same-sex couples. While the IRS must treat these unions as marriages, these couples will now have to file their taxes either jointly or separately which means harsher tax brackets. For example, in 2015 the 33% tax bracket for a single (unmarried) person began at a taxable income of $189,300. However, for a married couple who file their taxes jointly, the 33% tax bracket kicks-in when the couple’s combined taxable income is $230,450 – which is far from double the amount applicable to a single individual.

Nevertheless, it is great to see that the IRS is modernizing its Code to conform to the law that now recognizes both gay and heterosexual marriages throughout the Country.

If you have questions about or issues surrounding the tax benefits /consequences of your marriage, gay or heterosexual, or any other family law matter, you should speak with a qualified family lawyer as soon as possible. The family lawyers of DiPietro Family Law Group have experience with all family law issues in jurisdictions across Northern Virginia and Washington, DC. Contact us today for a consultation at (888) 530-4374.

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