Federal Ruling on Tax Status for Legally Married Same-Sex Couples |
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September 24, 2013, Volume 60, No. 6 |
The US Department of the Treasury and the Internal Revenue Service recently announced that legally married same-sex couples would be treated as married for federal tax purposes, regardless of whether the couple lives in a state that recognizes same-sex marriage.
As an institution with a proud history of supporting our LGBT community, Penn applauds this ruling to advance recognition of same sex domestic partnerships and sees this as a step toward greater equality.
Prior to the ruling, federal tax code did not acknowledge domestic partners as dependents for tax purposes, and the value of the employer-provided benefits for same-sex partners has been treated as taxable income to the individuals covering them. Since July of 2012, the University has been providing a tax offset to assist faculty and staff who cover domestic partners under Penn’s medical plans.
However, under this ruling, Penn faculty and staff legally married to same-sex spouses who are covered under one of Penn’s medical, dental or vision plans will no longer be required to pay Federal, Social Security or Medicare taxes on the value of the benefit extended to the same-sex spouse and his/her children. Those individuals will no longer receive the tax offset provided by Penn.
This change only applies to legally married same-sex couples. Faculty and staff who are covering a domestic partner under Penn’s benefit plans and are not legally married will continue to pay Federal, Social Security, and Medicare taxes on the value of the benefit extended to the partner and his/her children. In this case, Penn will continue to provide up to $125 per month (minus applicable taxes) to help offset these taxes.
All faculty and staff currently covering a same-sex domestic partner on Penn’s health plans will receive a letter from Human Resources with more detail on what to do if they are (or plan to be) legally married.
Faculty and staff who are legally married generally must file their 2013 Tax Returns as married filing jointly or married filing separately for the entire 2013 tax year. If you would like to make a change to your marital status within the Payroll system, please submit a completed Form W-4 (www.irs.gov/pub/irs-pdf/fw4.pdf) to the Payroll Office.
This ruling, which is applicable only for federal tax purposes, went into effect on September 16, 2013. The federal government is expected to issue additional guidance around how retirement plans and other tax-favored arrangements should treat same-sex spouses. We will share more information as it becomes available. If you have questions about the ruling, please contact the Penn Benefits Center at 1-888-PENNBEN (1-888-736-6236) or visit the IRS website at www.irs.gov
—Division of Human Resources
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