The IRS Recognizes Same Sex Marriage

IRS Recognizes Same Sex Marriage
The Internal Revenue Service have ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage. The ruling implements the federal tax aspects of the June 26th Supreme Court decision invalidating a key provision of the 1996 Defense of Marriage Act and had been long-awaited by tax professionals who wanted more clarity from the IRS. Under the ruling, same sex couples will be treated as married for all federal tax purposes including income, gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits like deducting health insurance, contributing to an IRA, and claiming the earned income tax credit or child tax credit.

Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory, or a foreign country will be covered by the ruling. However, the ruling does not apply to registered domestic partnerships or civil unions recognized under state law. Legally married same-sex couples generally must file their 2013 federal income tax return using either the “married filing jointly” or “married filing separately” filing status.

In addition, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.

Individuals who were in same-sex marriages may file amended income tax returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the three year statute of limitations. As a result, refund claims can still be filed for tax years 2010, 2011, and 2012. Some individuals may have signed an agreement with the IRS to extend the statute of limitations and permit them to file refund claims for tax years 2009 and earlier.

If you need assistance in filing an amended federal income tax return please call Gregory J. Spadea of Spadea & Associates, LLC in Ridley Park, Pennsylvania at 610-521-0604. Spadea & Associates, LLC provide estate and tax planning and file income tax returns year round.

Eight Tax Credits and Deductions for Parents in 2013

business man using sword to cut tax.
Learning Credit. Both credits may reduce the amount of tax you owe and are claimed by filing IRS Form 8863. If the American Opportunity Credit is more than the tax you owe, you could be eligible for a refund of up to $1,000. However, your adjusted gross income had to be less than $90,000 if single and $180,000 if married filing jointly to qualify for the credits. Your children may help you qualify for valuable tax certain credits and deductions listed below when filing your 2013 taxes.

1. Dependency Exemption. In most cases, you can claim your child as a dependent who lives with you regardless of when the child was born as long as you provide more than 50 % of the child support.

2. Child Tax Credit. You may be able to claim the Child Tax Credit of $1,000 for each of your children that were under age 17 at the end of 2013 by filing form 8812. However your adjusted gross income must be less than $75,000 if single and $110,000 if married filing jointly to qualify for the credit.

3. Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for your child or children under age 13, so that you could work. The credit is claimed on IRS Form 2441. However, if you are married filing jointly both parents must work to be eligible for the credit.

4. Earned Income Tax Credit. If you worked but earned less than $51,000 in 2013, you may qualify for Earned Income Tax Credit. If you have qualifying children, you may get up to $5,900 dollars extra back when you file a 1040 tax return and claim the credit on Schedule EIC.

5. Adoption Credit. You may be able to take a tax credit of up to $12,700 for certain expenses you incurred to adopt a child. You must file IRS Form 8839 in the year the adoption is finalized and your modified adjusted gross income had to be less than $190,000 to qualify for the full credit.

6. Higher education credits. If you paid higher education costs for yourself or another student who is an immediate family member, you may qualify for either the American Opportunity Credit or the Lifetime.

7. Student loan interest. You may be able to deduct interest you paid on a qualified student loan, even if you do not itemize your deductions on IRS Form 1040, line 33. However, your adjusted gross income must be less than $75,000 if Single and $155,000 if married filing jointly to claim the deduction.

8. Self-employed health insurance deduction – If you were self-employed and pay for your own health insurance, you may be able to deduct premiums you paid not only for yourself but to cover your child. It applies to children under age 27 at the end of the 2013, even if they are not your dependent.

If you have any questions or need help in preparing your taxes please contact Gregory J. Spadea of Spadea & associates, LLC in Ridley Park, Pennsylvania at 610-521-0604. He prepares tax returns year round and can amend an earlier year return if you missed taking advantage of one of the credits listed above.

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