On June 26, 2013, The Supreme Court of the United States (SCOTUS) after hearing arguments in United States v. Windsor, ruled that section 3 of the Defense of Marriage Act (DOMA) is unconstitutional. While this landmark decision directly impacts the lives of married gay couples in many states, the decision also impacts employers in those states, including Massachusetts.
What is the impact of this decision?
Married same-sex couples, who live in states where their marriages are recognized as legal, are now eligible for the federal rights that are available to other married couples, which include, as examples, the following:
- Filing federal income tax returns as married, filing jointly
- Access to social security spousal and survivor benefits
- Leave of work to care for an ill spouse, as provided by the Family Medical Leave Act (FMLA)
- Gift tax and estate tax exemptions for a spouse
- Ability to access flexible spending accounts for a spouse’s medical expenses
In short, the SCOTUS decision ensures that all federal protections and benefits will be extended to all legally married couples in the Commonwealth, which includes same-sex couples.
What are the tax implications for same-sex couples given that the decision was made mid-year?
Both the federal and state governments (where applicable) will recognize same-sex marriages as valid for the entirety of 2013, as long as the marriage was legally recognized on December 31, 2013. Those affected by this ruling can claim their refunds when filing their 2013 tax returns.
How should a Massachusetts employer proceed?
For Massachusetts employers, the SCOTUS decision means that the fair market value of a spouse’s health insurance plan cannot be imputed into an employee’s income for federal tax purposes. In short, employees who participate in a Family Plan or Employee and Spouse plan must be treated like all married couples have been treated in the past. Employers are required to make the necessary changes going forward.
For more information read Frequently Asked Questions Regarding the DOMA Decision on the Mass.gov website.