same-sex 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.

New Tax Rules for Legally Married Same-Sex Couples

Scarsdale accountant Paul Herman has all the answers to your personal finance questions! The following new tax rules have been created to accommodate legally married same-sex couples:

The U.S. Supreme Court’s decision in the Edith Windsor Case, invalidating a key provision of the Defense of Marriage Act, raised many questions regarding the federal income tax rights and responsibilities of same-sex couples. New Marriage Tax Rules for Same-Sex Couples from Scarsdale accountant Paul Herman  The U.S. Department of the Treasury and the IRS recently ruled that same-sex couples, legally married in a jurisdiction that recognizes their marriages, will be treated as married for federal tax purposes. This ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not. However, the ruling does not apply to registered domestic partnerships, civil unions, or similar formal relationships recognized under state law.

Same-sex couples will now be treated as married for all federal tax purposes (income, gift, and estate taxes) where marriage is a factor. The ruling applies to filing status, personal and dependency exemptions, the standard deduction, employee benefits, IRA contributions, and the earned income and child tax credits.

For 2013, legally married same-sex couples must file their tax return using either the married filing jointly or married filing separately filing status. For years prior to 2013, these couples may, but are not required to, file amended returns choosing to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations.

Our Scarsdale tax preparers here at Herman & Company CPA’s are here for all your financial needs. Please contact us for all inquiries and to receive your free personal finance consultation!

Herman and Company CPA’s proudly serves Bedford NY, Mount Kisco NY, Larchmont NY, Purchase NY, Rye NY, Harrison NY, Scarsdale NY, Greenwich CT and beyond.

Photo Credit: Mike Licht via Photopin cc

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.