Paul L. Caron

Thursday, March 21, 2013

Tax Implications of Supreme Court's Upcoming DOMA Decision

Supreme Court Case Could Have Tax Consequences for Same-Sex Couples:

The outcome in the U.S. Supreme Court case challenging the 1996 Defense of Marriage Act could have complicated tax consequences for same-sex couples, says Richard L. Kaplan, the Peer and Sarah Pedersen Professor of Law at the University of Illinois, an expert on taxation and retirement issues. ...

DOMA’s constitutionality is not solely an issue for the wealthy, Kaplan says. According to his article Rethinking Medicare's Payroll Tax After Health Care Reform, the Affordable Care Act imposes two new taxes on married couples with incomes greater than $250,000 and individuals with income greater than $200,000. “So, if two married people each earn $150,000, their combined income of $300,000 makes them liable for this extra tax,” he said. “But under current law, a same-sex couple would not owe anything, because unmarried filers have an individual threshold of $200,000 each.” The new Medicare tax on investment income works the same way, Kaplan says.

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