The Supreme Court today delivered a historic victory for gay rights, ruling 5 to 4 that the Constitution requires that same-sex couples be allowed to marry no matter where they live and that states may no longer reserve the right only for heterosexual couples.
With that Supreme Court decision extending the right to marry to gay and lesbian couples in all 50 states, same-sex couples in the 14 states where there were still bans in place have a host of financial issues to consider.
“What this does is it levels state law with federal law,” said Matthew McClintock, an estate lawyer and vice president of education for WealthCounsel.
Same-sex couples will now enjoy the same benefits—and sometimes downsides—of marriage that all other couples get, McClintock said.
Here are some financial issues that will be impacted by the decision:
Estate planning. The biggest outcome of the victory say estate attorneys is that same-sex married couples now have the same legal rights of spouses. They have the right to inherit property from their spouse even without a will, the right to adopt children together and make medical decisions on the part of a spouse.
“It really simplifies things. Now you can do a married filing jointly even if your state doesn’t like the fact that you’re in a same-sex marriage.”
Federal taxes. In filing state taxes, couples typically complete their federal return first. That gives them their adjusted gross income, a number that carries over to state tax returns. But couples in the states that didn’t recognize marriage were forced to file two sets of returns. First, they would file a federal return as married.
Then file a dummy return as singles in order to file a state return. “It really simplifies things,” McClintock said. “Now you can do a married filing jointly even if your state doesn’t like the fact that you’re in a same-sex marriage.”
Feeling the tax bite. One area where it’s not beneficial to be married is when it comes to dealing with the so-called “marriage penalty.” Two high-earning people will pay more in taxes when filing jointly than they would on their own.
For example, two singles each making up to $89,350 would each be in the 25 percent tax bracket if they were to file on their own. But together, their $178,700 combined income puts them in the 28 percent bracket. The 25 percent bracket stops at $148,850 for couples who are married and filing jointly.