The Supreme Court ruling striking down the federal Defense of Marriage Act (DOMA) means that married gay couples who, for federal purposes, were required to file as single individuals will now be allowed to file as married couples. Let the tax filings begin!
This ruling opens a new avenue of tax savings that were previously denied to gay couples. I would suggest to every gay married couple that they sit down with a tax professional to find out exactly how this ruling impacts their tax liability and to find out if married filing joint or married filing separate is the best route to take.
Here are some basic tax tips, not just for gay couples, but for all newlyweds out there:
- Couples need to evaluate if filing together as married filing joint is the optimal filing status. Using last year’s tax returns is usually close enough to determining this year’s outcome. However, if there are any current year transactions that will impact your taxes, make sure to take that into account. Usually you will derive a greater benefit with a married filing joint status, however, the combination of both taxable incomes may throw you into a bigger tax bracket and you want to be ready for this. This is especially the case if one of the parties has been filing as Head of Household with dependents and enjoying the Earned Income Tax Credit.
- You may discover that you are now able to itemize deductions rather than taking the lowly standard deduction. If this is the case, begin tracking the following expenses in order to maximize your itemized deductions next tax season: vehicle registration fees, property taxes, mortgage interest, medical expenses, cash and noncash charitable contributions, union dues, unreimbursed employee business expenses, gambling losses to the extent of winnings, financial management and advisory fees, cost of tax preparation software, tax planning and preparation fees.
- If you find your liability will be greater as a married couple and you work for W2 wages, file a new Form W4 with your employer to take fewer exemptions. This will decrease your take home pay, but you will not have an ugly surprise next April 15. Use the IRS Withholding Calculator to see how many exemptions you should claim.
- If you change your name, be sure to call the Social Security Administration at 1.800.772.1213 or visit your local SSA office with a copy of your marriage certificate and birth certificate in order to get a new Social Security card. You will be required to file Form SS-5 Application for Social Security Card.
- If you weren’t previously living together, you should update this information with your employer to ensure that you receive your W2 form at the correct address next January. Also, if you change your address, you need to let the IRS know. File IRS Form 8822.
- It doesn’t matter when you get married this year. If you are married as of December 31, that’s your marital status for the entire year.
Congratulations and best wishes for a wonderful life together!
Bonnie Lee is an enrolled agent admitted to practice and representing taxpayers in all 50 states at all levels within the Internal Revenue Service. She is the owner of Taxpertise in Sonoma, Calif., and the author of Entrepreneur Press book, “Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn't Want You to Know.” Her new e-book Taxpertise for the Creative Mind Murder, Mayem, Romance, Comedy and Tax Tips for Artists of all Kinds is available at all major booksellers. Follow Bonnie Lee on Twitter and on Facebook.