Supreme Court Rules Marriage Equality in All States Further Simplifying Tax Preparation for Same-Sex Couples

Tax Law Changes, Tax News Stocksy_txpf21dc11dp5U000_Small_545671

Good news for more same-sex married couples! Today the Supreme Court ruled for marriage equality in all 50 states, finding that state bans on same-sex marriage are unconstitutional. Now millions of Americans living in the remaining 13 states that currently prohibit same-sex marriage, will be able to marry and file their taxes as a married couple. This will simplify the tax preparation process and enable them to take advantage of tax benefits reserved for married couples.

Currently, most states already recognize same-sex marriages and legally married same sex couples are allowed to file as married couples avoiding the burden of having to prepare multiple (as many as 5 ) tax returns. Until now, however, married same-sex couples living in a state that didn’t recognize same-sex marriage had to file their tax returns as unmarried, adding a lot of extra time and expense to their tax preparation process.

Today’s final ruling will provide tax benefits to legally married same-sex couples no matter what state they live in. Here are some of the new tax benefits they will see:

Savings on Tax Prep

  • You can now save time and money on your tax preparation costs.  Same-sex couples who previously had to pay high fees to have someone prepare their taxes because of the complexity of filing multiple federal and state returns, can easily and accurately prepare their taxes together with TurboTax at a significantly lower cost.

Deductions and Credits for Dependents and Family – If your filing status is married filing jointly, you will be able to take larger tax deductions and credits for your children and other dependents together as a married couple.

  • Dependency Exemption – The dependency deduction may mean an additional tax deduction of $4,000 per dependent and an additional $4,000 exemption for your spouse.
  • Earned Income Tax Credit – When you file as a married couple you may be eligible for an Earned Income Tax Credit worth up to $6,242.
  • Education Credits and Deductions – Education is expensive, you may be able to claim a tax credit on your taxes of up to $2,500 for your dependent or spouse’s education.

Tax Rates When Filing as a Married Couple

  • You may be able to take advantage of what is known as the “marriage bonus” since tax rates are typically lower for couples filing married filing jointly.  A married same-sex couple who earns $80,000 per year may see savings of at least $500 when filing jointly without considering additional deductions they will be entitled to.
  • Some same-sex married couples who earn higher incomes may see a “marriage penalty” because their high dual incomes may bump them up into a higher tax bracket.

Tax Savings on Inherited Property and Gifts

  • A surviving spouse in a same-sex marriage can take advantage of the estate tax marital deduction, which allows an unlimited deduction from the gross estate of property passing to the surviving spouse.
  • Legally recognized same-sex couples can now gift money and take advantage of a doubled annual gift tax exclusion of $28,000.

Like all tax laws, TurboTax is up to date and has you covered. Continue to check back with the blog for the latest tax laws and tips to help you keep more money in your pocket.

 

 

 

 

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