Arons & Solomon | May 1, 2015 | Articles
Married same-sex couples in New Jersey where same-sex marriage has been legally recognized since October 21, 2013, enjoy an array of financial benefits as a result of their married status. This article outlines a number of those benefits available to those couples.
To begin, married gay couples will almost certainly have an easier decision when it comes to tax preparation. On August 29, 2013, the Internal Revenue Service (IRS) ruled that same-sex couples, legally married in any jurisdiction that recognizes their marriages, will be treated as married for federal tax purposes, including income, gift and estate taxes. Consequently, same-sex couples will now be able to file joint income tax returns, and claim any child they may have as a dependency exemption on those returns. Same-sex couples legally married prior to this IRS ruling may amend previously filed federal income tax returns choosing to be treated as married for one or more prior tax years, which may still be open under the statute of limitations.
Gay married couples will now be able to financially plan for themselves and their family without going out of their way to spend money on costly legal vehicles to protect their assets for the ones that they love. Gay married partners will be now be able to list each other as beneficiaries of pension plans. They will be able to file joint bankruptcy petitions as they can now inherit each other’s debts.
Married same-sex couples can expect to receive Social Security benefits upon the death, disability or retirement of a spouse, as well as benefits for minor children. They will have access to COBRA insurance benefits so that the family does not lose health insurance should a spouse be laid off. They will be eligible for exemption from estate taxes when one of them dies. They will be able to include their spouse on employer-provided health insurance without the spouse having to declare that coverage as taxable income. Same-sex couples also have hospital rights, which they previously did not and in some cases, would not be able to see their loved one.
Benefits do not come without accompanying liabilities and same-sex marriage is no exception. Take, for example, couples where both partners are high earners. Should they decide to marry, they will likely pay more in taxes. Furthermore, if they have high school-age children, their chances of receiving college financial aid probably will be diminished, if not ruined.
Accordingly, the legalization of same-sex marriage was a huge success for same-sex couples. But before tying the knot, same-sex couples need to consider tax consequences, estate planning, health insurance, pension, and Social Security benefits, and even college funding. Thoughtful couples contemplating marriage undoubtedly will have questions and concerns best answered by their accountant and a knowledgeable attorney.