Tax Implications of the Supreme Court's DOMA Ruling

On Wednesday, the U.S. Supreme Court struck down the Defense of Marriage Act (DOMA) and California's Proposition 8, two major victories for supporters of same-sex marriage. The rulings have major tax implications for same-sex couples.

The DOMA ruling came in U.S. v. Windsor and invalidated Section 3 of the law, which defined "marriage" as a union between one man and one woman and "spouse" as a person of the opposite sex who is a husband or wife. The case was brought by Edith Windsor, who married Thea Speyer in Canada in 2007. When Speyer died in 2009, New York, where the couple lived, recognized same-sex marriages from other jurisdictions.

Because Windsor was not covered by the federal spousal deduction, she owed more than $363,000 in federal estate tax on Speyer's estate. With the benefit of that deduction, she would not have owed any estate tax.

Daily Finance has an overview of the other tax and financial implications of the ruling. Changes for same-sex couples include:

• The ability to file federal income taxes jointly
• Exemption from the gift tax when transferring assets to each other
• Spousal benefits and tax breaks (in some cases) on health insurance
• The same federal tax treatment and Social Security benefits as opposite-sex couples upon one spouse's death

We'll add more resources as we come across them.

UPDATES:

• Article from CPA Practice Advisor on tax implications
• Tax briefing (PDF) from CCH
• And an interview with VSCPA member Art Auerbach, CPA, via gayrva.com