Same-Sex Couples Might File Tax Refund Claims According to Watson CPA Group

Recently the United States Supreme Court announced it was scheduling hearings for a case brought against the Defense of Marriage Act (DOMA). Same-sex couples could be entitled to several tax credits and refunds starting with tax returns filed in 2009, but time is running out.

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Jason Watson, EA, MBA

if DOMA is found unconstitutional, this amended tax return reflects the correct tax liability for a married tax return

Colorado Springs, Colorado (PRWEB) January 07, 2013

The 1996 Defense of Marriage Act law could be struck down or at least heavily altered by an upcoming United States Supreme Court decision. This could have major tax ramifications for tax returns starting in 2009 when states began allowing and recognizing same-sex marriages. Refunds for estate and income taxes that were previously unavailable would now be claimed by same-sex couples filing amended tax returns.

However, there is a timing issue especially for 2009 tax returns. Typically, a taxpayer has three years to file an amended tax return or file what is called a protective claim. The period of limitations starts on the due date of the tax return. So in the case of 2009 tax returns, the amended tax return or protective claim must be filed by April 15, 2013. But the Supreme Court is not expected to rule on DOMA until the summer of 2013, after the filing deadline.

There is a remedy available for same-sex couples. First, they should speak to a tax professional to determine if filing jointly makes financial sense. If the tax liability of the two single tax returns equals the tax liability of jointly filed tax return, then the hassles might outweigh the benefits. Of course, many same-sex couples might still want to amend their tax returns for intrinsic reasons. Generally the most benefit will be gained by same-sex couples with disparate incomes, or if there has been any inheritance tax paid for a deceased partner’s estate.

Next, an amended tax return must be prepared showing both taxpayers as married, filing jointly. The words “protective refund claim” must be written across the top of the amended tax return. In addition, an explanation must be attached stating that in the event DOMA or portions of DOMA are found unconstitutional, this amended tax return reflects the correct tax liability for a married, filing joint tax return. Since all amended tax returns are mailed to the IRS, this statement can simply be stapled along with the amended tax returns and related tax documentation. And this all needs to be done by April 15, 2013.

The Watson CPA Group also reports same-sex couples might be incorrectly paying taxes on health benefits that one partner provides for the other. If one person qualifies as a domestic partner, and he or she does not work or is not eligible for health benefits through his or her employer, those benefits are not taxable. Many employers incorrectly impute this income as taxable which is later reflected on a taxpayer’s W-2. To account for the correct taxable income on a tax return in these situations, the tax return must be mailed along with an explanation statement.

The Watson CPA Group is a progressive tax consultation and preparation firm embracing internet technology to provide worldwide tax service from offices in Colorado USA. A secure online Client Portal allows remote taxpayers to exchange financial information, tax documents and tax returns saving valuable time and resources.

Since 1997, they are a team of Colorado Springs CPAs preparing individual and corporate tax returns for a flat fee, and specializing in LLCs, small business and corporate taxes, pilot and flight attendant tax deductions, per diem deductions, rental property owners, real estate professionals and expat tax clients.

For more information visit http://www.watsoncpagroup.com.


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