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Gay marriage: more taxes, more benefits

June 26, 2013 By Liz Weston

Champagne glassesThe Supreme Court’s decision to invalidate the Defense of Marriage Act means that gay married couples will have access to the federal benefits now enjoyed by other marrieds.

These benefits include tax breaks, Social Security benefits and estate planning advantages that until now were denied gay couples, even if their marriages were recognized under state law.

Among other things, gay marrieds will now be able to:

  • claim Social Security benefits based on a spouse’s working record and qualify for survivor benefits.
  • fund an IRA or Roth IRA for a nonworking spouse.
  • split a retirement fund or other assets without triggering tax bills if they divorce.
  • exempt health care benefits for a spouse from their federal income.
  • bequeath their estate to a spouse without triggering potential federal estate taxes.

These gains may come with a cost: as NerdWallet puts it, “federal income tax brackets are in fact easier on high-income individuals than they are on most high-income married couples.” NerdWallet figured that same-sex couples earning more than $146,000 may see their tax bill go up by over $1,000.

One of my gay friends, a financial planner, just posted to her Facebook page that her taxes are likely to go up by several thousand dollars. But she was happy, as she put it, to “take one for the team.”

 

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Filed Under: Liz's Blog Tagged With: Estate Planning, gay marriage, marriage, Social Security

Reader Interactions

Comments

  1. Stephanie says

    June 26, 2013 at 2:52 pm

    Thank you so much for an extremely fast and clear explanation of the Court’s decision. I also don’t mind possibly paying more taxes now and having these advantages, benefits, and tax breaks later.

Trackbacks

  1. Decision Day: DOMA and Prop-8 Fall | commonplacebook.com says:
    June 26, 2013 at 3:26 pm

    […] And a good analysis of what the end of DOMA means for married gay couples: […]

  2. Friday Reading: Goodbye LTR says:
    June 28, 2013 at 12:24 pm

    […] Gay marriage: more taxes, more benefits by Liz Weston at Ask Liz Weston […]

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