What Today’s Supreme Court Ruling Means For Gay Couples’ Wallets

Earlier today, the Supreme Court effectively struck down the federal Defense Of Marriage Act. For same-sex couples around the country, this could open up a whole new world of tax breaks and benefits that were previously not allowed, while also taking away some unintended perks that same-sex couples had enjoyed because the government did not recognize their unions.

Because the Supremes did not flat-out declare that same-sex marriages are protected nationwide, it appears that many of the tax-based perks of marriage will initially only be available to couples who were married in, and live in, one of the 12 states (and Washington, D.C.) where gay marriage is legal.

But for same-sex couples in those states, there are numerous financial reasons to be happy about today’s ruling.

CNNMoney.com’s Blake Ellis enumerates a handful of the tax benefits previously unavailable to married gay Americans:

Joint Income Tax: Same-sex couples will be able to file joint federal income tax returns. For some couples, this won’t have a huge impact on their returns, but for couples where there is a disparity in income between the two partners, there could be potential for huge savings.

No Gift Tax: While members of heterosexual couples have been able to transfer assets back to each other without fearing the tax man, same-sex couples have been subject to a 40% gift tax after the total value of transfers pass the $5.25 million mark. Again, for many couples this may not be an issue, but for people who own properties or are small-business owners, being able to transfer that asset to a spouse without the gift tax is a mammoth boon.

Death Benefits: This is a huge one that gay marriage advocates have been fighting to get for years, as spouses in same-sex marriages will, in the even of one partner’s death, now be eligible for the for the same federal tax treatment and Social Security benefits as heterosexual couples.

Business Insider’s Josh Barrow goes even further, with a list of 22 ways that today’s ruling could impact same-sex couples’ finances. Here are a few of the most important ones, including some that have the result of possibly hurting a couple’s balance sheet:

No Estate Tax When Inheriting From Late Spouse: This was actually the heart of the lawsuit against the DOMA. The plaintiff was hit with an estate tax bill for $360K when she received her inheritance from her late wife. Now same-sex spouses will be able to inherit a deceased partner’s estate without being taxed.

Social Security Benefits: “Social Security old-age benefits can be based, in part, on a current or former spouse’s income,” explains Barrow. “Some retirees who are or have been gay married will now be eligible for higher benefits.” Conversely, since Supplemental Security Income benefits are also tied, in part, to a spouse’s income, some same-sex couples will now be ineligible for benefits as the combined incomes would put the couple over the threshold.

Medicaid: If the states begin factoring in the income of same-sex spouses into an applicant’s Medicaid eligibility, then some people will be found ineligible because of their combined incomes.

Spouses of Coal Miners, Railroad Workers, and Public Safety Officers: These occupations provide access for spouses to special benefits under federal law. Now same-sex spouses will receive equal recognition.

Federal Education Loans and Grants: This is another one where a spouse’s income could benefit or hurt you, as a spouse’s income is factored into one’s eligibility for these loans and grants. If the combined income is too high, the student may become ineligible.

Farm Subsidies: Likewise, the government limits the amount of farm subsidies a “person” can receive, and it also counts a married couple as a single person. So if you’re a married couple of same-sex farmers, prepare to lose some subsidy money.

Same-sex marriage ruling: Financial impact [CNNMoney.com]

DEAR GAY COUPLES: Here Are The 22 Big Ways Your Life Is About To Change [BusinessInsider.com]