Now that the component of DOMA (Defense of Marriage Act) that refused to recognize gay marriages has been ruled as unconstitutional, many gay couples are wondering how this is going to benefit them when it comes to state tax exemptions. The bottom line is that life does not change much for those couples still living in states that do not recognize gay marriage. Even though that is in conflict with the federal ruling of the Supreme Court, there is no designation forcing individual states to recognize the constitutional rights of same-sex spouses.
A big hitch is the fact that the Internal Revenue Service, like all federal agencies, defines marriage status by where the couple lives and not where they got married. So if you got married in Maryland, where same-sex marriage is legal, but moved to Virginia, where it is not, you will not be eligible for any state exemptions such as being able to file your taxes jointly to receive certain deductions.
If you are in a gay relationship or legally married in a U.S. state or even in another country (like Canada), then you might be wondering what is being done to correct this situation. There have been many gay rights groups, including activists from the Human Rights Campaign that are pursuing Obama to issue an order that all federal agencies define marriage based on the “place of celebration.” The Pentagon already defines marriage based on the place of celebration and has stated an intention to make the same benefits available to all military spouses as soon as possible. In terms of immigration activists are asking for marriages green cards for spouses they married out of the country.
According to our gay realtor if you live in a gay-marriage friendly state then you do not have to worry about leaving an inheritance or property to your spouse. You will not have to pay any taxes to the IRS. However if you are left property or money in a state that does not recognize same sex spouses then you may find yourself faced with some hefty bills. (always check with legal and tax professionals to verify this information for your stats)
The same thing goes with gift taxes. The striking down of DOMA has made it possible for a same sex spouse to put the name of his or her beloved on a house deed without paying tax. Before DOMA was struck down that would have been considered a taxable gift and the recipient of the gift would have owed tax on all but the first $14,000. That means that a million dollar house might be taxed at $500,000 minus the $14,000.00 which for some might be too expensive to accept the gift. However just because this has been corrected federally does not mean it is corrected in every state. Each state has its own laws, likely going through revisions, governing how this is handled.
However, in the meantime, if you and your significant same-sex other want to enjoy the state and federal tax exemptions you are advised to get married in one of the 13 states plus the District of Columbia that recognize gay marriage.
