Same-Sex Marriages Recognized For Federal Tax Purposes

Yesterday, the US Treasury and IRS ruled same-sex couples legally married in a jurisdiction that recognizes that marriage will be valid for federal tax purposes.  This applies whether or not the couple is currently living in a jurisdiction that recognizes the marriage.  This ruling clarifies tax filing and benefit questions following the Supreme Court striking down the Defense of Marriage Act (DOMA) in June of this year.  You can read the complete ruling here.

What about Illinois Civil Unions?

This ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law, thereby excluding Illinois Civil Unions.  However, if you were married in another state or foreign country recognizing same-sex marriages, you may still qualify.

What benefits does this include?

The ruling applies to all federal tax provisions where marriage is a factor.  This includes:

• The ability to file a joint tax return and the ability to take personal and dependency exemptions
• Taxation of employee benefits, such as tax free receipt of same-sex spousal health insurance
• Estate and gift taxes, allowing for unlimited tax-free gifts and unlimited marital deduction for estate tax purposes to your same-sex spouse

Can I Amend Prior Tax Returns?

Yes, if you previously filed single or head of household in a year in which you were legally married, you may be eligible to amend the return to change marital status. There are limitations to be aware of.  For instance, the statue of limitations general restricts amendments of returns to three years following the original due date of the return.  For most couples, this would restrict them to amending only 2010 and beyond.  Exceptions may apply for specific circumstances.

What are the next steps?

For our clients who are affected by this ruling, we will be discussing how this applies to you directly and how to adjust your financial and tax plan accordingly.

If you are not a client, but interested in finding more about how your tax situation integrates into your entire financial picture, contact us today!

Bluestem Launches our Blog!

Welcome to the inaugural blog post of our newly redesigned website!  I am particularly excited about this new site.  It tells the story of our planning process, and is designed to be more interactive!  With the launch of our Blog, we hope to keep you up to date on what is happening in the firm and add short discussions and articles of interest in between our quarterly newsletter. If you want to follow this blog, you can subscribe by email in the right hand sidebar.

In my first post, I am excited to announce a two milestones in my own education and experience you might be interested in.

Master's Degree

This past summer, I have completed my Master's Degree through Kansas State University.  I started this journey 4 years ago to meet the educational requirements to becoming a CERTIFIED FINANCIAL PLANNER™.  My degree is in Family Studies and Human Services, specialized in Financial Planning.  Like my Bachelor's Degree from the University of Illinois, this program is based on family and consumer research and theory.  My Masters courses beyond the CFP® courses included studies of quantitative issues such as real estate and consumer law issues, as well as qualitative applications such as financial counseling, family dynamics, and behavior biases.

Enrolled Agent

As part of my Master's program, I was able to use self-study coursework to become an Enrolled Agent (EA).  Enrolled Agent status is granted by the IRS after showing a high level of competency in the areas of Personal and Business Income Taxes, Tax Ethics and Procedures, and passing a background check.  Like a CPA or Attorney, EA's are afforded unlimited rights to practice in front of the IRS.  After a long process of studying, testing and application, I was granted the Enrolled Agent status in May of 2013.   This means that as part of Bluestem's audit protection services, I now have expanded rights to defend or represent our clients in the event of an audit.

These items both represent the completion of two large significant personal and career goals.  Though I have no immediate plans for additional degrees, I look forward to continuing my lifelong education and development.