While this was a huge step forward for same-sex couples seeking equal legal treatment, the decision still left many people questioning their tax status. One of the most common complications included questions of how the IRS would treat taxpayers who were legally married in one state but then moved to another state that did not recognize same-sex marriage. However, in 2015’s Obergefell v. Hobbes case, the Supreme Court put these issues to rest by ruling that the federal government and all states must recognize and allow same-sex marriages.
To reflect the new laws, the IRS just finalized proposed regulations last week that amended the definitions of “spouse” and “husband and wife” under the Tax Code.
For federal tax purposes, under the final IRS regulations the terms “spouse”, “husband”, and “wife” are all interchangeably defined as an individual married to another individual. “Husband and wife” is defined as two people lawfully married to each other, and still apply regardless of the taxpayers’ sexes. The IRS also plans on incorporating the term “spouse” as opposed to “husband” and “wife” when updating forms and publications going forward. Further, any marriage of two people will be recognized for federal tax purposes if that marriage would be recognized by any state, possession, or territory of the United States.
For foreign marriages, the new regulations state that two individuals in a relationship defined as marriage under the laws of any foreign jurisdiction are considered married for federal tax purposes if that relationship would also be recognized as marriage under the laws of the United States. This makes it simple for foreign couples or their tax lawyer to determine their marital status under the tax laws of one location in the United States, rather than having to be aware of all the states’ laws.
Taxpayers that are not married but have entered into registered domestic partnerships, civil unions, or similar relationships will not be treated as married. The IRS states that this policy will allow taxpayers who choose not to be married, for tax planning or other legal purposes, to retain their individual tax status.The newly finalized regulations also amended the Income Tax Regulations, the Estate Tax Regulation, Gift Tax Regulations, Generation-Skipping Transfer Tax Regulations, Employment Tax and Collection of Income Tax at Source Regulations, and Regulations on Procedure and Administration.
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