Social Security has begun paying spousal benefits in 13 states and the District of Columbia, all jurisdictions where same-sex marriage is legal.
Social Security issued what it calls a list of “marriage states. This includes California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington, D.C. Social Security’s official regulation book now says claims for spousal benefits are approved for people who were married in a state that recognizes same-sex marriages and are NOW LIVING in a state where same-sex marriage is legal.
Federal law says a marriage must be considered legal in the couple’s “state of domicile” to be eligible for Social Security benefits. What happens if a couple was married in a state recognizing the marriage, but they now live in a state which doesn’t. The Justice Department is now reviewing the issue to decide whether policy can be changed by an administrative decision or whether it requires an act of Congress.
For the 13 states and DC, the new rule means that spousal benefits are immediately available. A spouse is entitled to the larger of two amounts, the benefit the worker earned, or 50% of the other spouse’s benefit, whichever is larger.
An example: John and James were married in Delaware, and now live in New York. John is eligible for a benefits of $700 a month based in his work record. James gets a benefit of $1,700 a month. John can receive $850 a month as his spousal benefit. James dies. John can now collected $1,700 a month-James benefit–as a survivor’s benefit.
The state of residence issue also is causing uncertainty for the IRS and health insurance benefits. Married couple with health insurance receive the benefit tax-free. Until the recent Supreme Court decision, the IRS would require taxes to be paid by the same-sex spouse of someone with health coverage. John had coverage at work and included James on his policy. The value of James share of the coverage was considered income and James had to pay taxes on it.
The IRS policy applies to the state where a couple lives. In the 13 states and DC where same-sex marriage is legal, health insurance will be tax-free for couples like John and James. But it is not yet clear what the IRS will do on this issue in the other states.
Meanwhile, the federal government has announced that the recognition of same-sex marriages for government health insurance eligibility will be recognized in all states, regardless of their marriage laws. The married same-sex spouses of federal workers will be able to enroll for federal health benefits. ederal Office of Personnel Management announced that the legally married same-sex spouses of federal employees will be eligible for health insurance coverage, regardless of where they live. “That will bring health insurance to many, many people across the land,” according to Susan Sommer, director of constitutional litigation at advocacy group Lambda Legal. There are about 2.65 million federal workers.
Video Alert: IRS, Taxes and Same-Sex Married Couples
Posted: 04 Sep 2013 08:45 AM PDT
The Slott Report
has extensively looked at IRS’ DOMA guidance as it relates to taxes, IRAs and same-sex married couples through IRS Rev. Ruling 2013-17. Now, we have put all key points into a video alert at Ed Slott and Company’s YouTube Page, IRAtv.
The video below with Ed Slott and Company IRA Technical Consultant Jeffrey Levine talks about the tax and retirement planning issues related to Rev. Ruling 2013-17. You can also click here to view the video.
“There are still some gray areas that need some clarification,” Rae says. “But striking down DOMA is a huge step in the right direction.”
The Williams Institute, a think tank at the University of California, Los Angeles School of Law, estimates that there are approximately 650,000 same-sex couples in the U.S. today — including 114,100 legally married and 108,600 in civil unions or registered domestic partnerships. Now that Section 3 of DOMA was repealed, “114,100 additional couples will be eligible for the range of safety-net programs and benefits that fall under Social Security’s umbrella,” says Burns.
Since Social Security currently serves more than 56 million Americans, “This would hardly impact the financial standing of the Social Security program,” he says. “More importantly, social insurance programs like Social Security are an ultimate net gain to the economy by keeping people out of poverty, protecting against the vicissitudes of health, old age and disability.”
