Marriage

Same-sex marriage to boost state tax revenue

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

taxes-blog-Same-sex-marriage-will-boost-state-tax-revenue

 

The Supreme Court’s ruling legalizing same-sex marriages across the United States was a victory for the couples who long fought for equal marital rights.

It also could prove to be a reason for state treasuries to celebrate.

The Williams Institute at the UCLA School of Law says that the increased number of weddings could produce a national economic boost of up to $2.6 billion in just the first three years that same-sex marriage ceremonies are performed nationwide.

That should lead to a total of $184.7 million in new tax revenue, says the law school think tank.

More wedding money

The money, according to the group’s data, will come from the expanded wedding services as gay and lesbian couples head to the altar.

Businesses that provide wedding planning, catering, venue and myriad other wedding-related services naturally will see their incomes and taxes increase.

So will ancillary industries, such as the travel and lodging sectors that will have the couples’ out-of-town wedding guests as new customers. This spending boost can lead to an increase in state and local tax revenue and an influx of tourism dollars that benefit local businesses.

More state income taxes possible

In addition, the Williams Institute estimates more than 13,000 new jobs will be created nationwide, thanks to the growing number of nuptials.

For the 41 states that collect income taxes, that will mean additional taxes from the new workers within their borders.

Some states also could see increased tax collections simply from the new couples’ filing status changes.

Now that same-sex couples can fill out returns as married filing jointly in states with income taxes, some of the new married couples could see their taxes go up as their combined incomes push them into higher tax brackets.

No income tax, no problem

Even the states that don’t levy individual income taxes should benefit substantially.

In my home state of Texas, for example, Williams Institute researchers estimate that more than 23,000 couples will marry during the first three years of legal same-sex marriage, providing the Lone Star treasury with nearly $15 million in tax revenue on total wedding spending of almost $182 million.

The financial forecast is similar for Florida, another large, no-income-tax state that offers lots of beach venues where couples can exchange vows.

Tax planning for all

Of course, the opposite is true, too. States could see a dip in their revenue, thanks to the newly married same-sex couples.

This might happen, for example, if only one spouse works. By now being able to file a joint state tax return, the same-sex newlyweds could see lower tax bills.

So states, just like their taxpaying residents, will be doing some tax planning to see how the new marriage equality law affects their bottom lines.

Generally, however, more wedding business will be good not only for the happy couples, but for the states’ economies and tax collectors.

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Weddings Mean Tax Changes & Small Business Resources

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!  

Weddings Mean Tax Changes

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It may not be as high on the wedding plan checklist as the venue, invitations and attire, but there are important tax issues created by a marriage that warrant some prompt attention following the wedding.

Name change. Anytime names are changed, it should be reported to the Social Security Administration (SSA). The name associated with an individual’s Social Security Number (SSN) should match the name on the tax return. To change a name with the SSA, file Form SS-5, “Application for a Social Security Card.” The form is available from www.ssa.gov, by calling (800) 772-1213, or from the local SSA office.

Address change. Let the IRS know about an address change by filing Form 8822, “Change of Address.” Also notify the U.S. Postal Service at www.usps.com to forward mail. You may also report the change at your local post office.

Change tax withholding. A change in marital status requires that a new Form W-4, “Employee’s Withholding Allowance Certificate,” be furnished to the employer(s). Combined incomes may move the taxpayers into a higher tax bracket. Search www.irs.gov for the IRS Withholding Calculator tool for help completing the new Form W-4.

Change in filing status. Marital status is determined as of December 31 each year. Spouses can choose to file jointly or separately each year. We can help you make that determination by calculating your tax liability both ways.

Change in circumstances. Taxpayers receiving an advance payment of the health care premium tax credit in 2014 should report changes in circumstances, such as a change in income or family size, to the Health Insurance Marketplace. Also, the Marketplace should be notified when you move out of the area covered by your current Marketplace to ensure you get the proper type and amount of financial assistance.

 

Herman and Company CPA’s proudly serves Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, White Plains NY, Mt. Kisco NY, Pound Ridge NY, Greenwich CT and beyond.

Employment Tax Withholding– Refunds and Adjustments for Same-Sex Married Couples

Scarsdale accountant Paul Herman has all the answers to your personal finance questions! Federal income and employment tax rules provide exclusions from gross income and from wages for specific benefits employers provide to the spouse of an employee. Prior to the Windsor decision, married same-sex taxpayers were excluded from receiving the benefit of these provisions. Same sex marriage and tax tips from scarsdale cpaAs a result, employers withheld and paid employment taxes on certain benefits provided to the same-sex spouse of an employee because (1) the marriage was not recognized and (2) the benefits were not treated as excludable from gross income or from wages for federal income or employment tax purposes.

Following the Supreme Court’s decision in Windsor, the IRS provided guidance to employers and employees on how to make claims for refunds or adjustments (corrections) of overpaid payroll taxes. Specifically, taxpayers who overpaid FICA (Social Security and Medicare) taxes and federal income tax withholding for certain benefits provided and remuneration paid to same-sex spouses may now be entitled to a refund of or an adjustment to their withholding.

The IRS has provided two alternative procedures for employers to correct the overpayment of employment taxes attributable to same-sex spousal benefits:

  1. An employer can repay its employees for the over-collected FICA and federal income tax withholding with respect to same-sex spousal benefits for the first three quarters of 2013 during the fourth quarter of 2013. The employer will then reduce fourth quarter wages, tips, and other compensation on its fourth quarter Form 941.
  2. An employer that does not reimburse the employee’s over-withholding by December 31, 2013, can file one Form 941-X for the fourth quarter of 2013 to correct FICA taxes paid in all four quarters of 2013. This procedure will correct overpayments of FICA taxes for same-sex spouse benefits paid in 2013. The employer does not correct for over-withheld income taxes; instead, the employees will receive credit for the over-withheld income taxes when they file their 2013 federal income tax return.

The IRS has also provided a special administrative procedure for employers to make adjustments or claims for overpayments during years before 2013 still open under the statute of limitations (2010, 2011, and 2012). For these years, an employer can file one Form 941-X for the fourth quarter of each open year. This fourth quarter Form 941-X would include adjustments or refunds of all overpayments of FICA (but not income) taxes with respect to same-sex spousal benefits provided during that entire year.

Our Scarsdale tax preparers here at Herman & Company CPA’s are here for all your financial needs. Please contact us if you have questions about these provisions or any other tax compliance/planning issues, and to receive your free personal finance consultation!

 

Herman and Company CPA’s proudly serves Armonk NY, Bedford Hills NY, Chappaqua NY, Harrison NY, Scarsdale NY, Mamaroneck NY, Stamford CT and beyond.

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Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.