The IRS promised to provide more guidance regarding the tax treatment of same-sex couples in the wake of the Supreme Court's recent ruling invalidating Section 3 of the Defense of Marriage Act (DOMA). Slowly but surely, it's starting to deliver. The latest offering: New IRS Notice 2014-01 clarifies the rules relating to cafeteria plans, including flexible spending accounts (FSAs) and health savings accounts (HSAs).
- A cafeteria plan may treat a participant who was married to a same-sex spouse on the date of the Supreme Court decision as having experienced a change in legal marital status. Therefore, a same-sex spouse can now revoke a prior election or make a new election based on the marital status change.
- Such an election may be accepted by a cafeteria plan if it is filed at any time during a plan year that includes the date of the Supreme Court decision – June 26, 2013 – or a plan year that includes December 16, 2013. The plan also may permit a participant who married a same-sex spouse after June 26, 2013, to make a midyear election change due to a change in legal marital status. Any election made with respect to a same-sex spouse must satisfy the usual requirements.
- Under the new Notice, an FSA may be used to cover expenses of a participant's same-sex spouse if the expenses were incurred no earlier than the beginning of a plan year, including June 26, 2013, or the date of marriage, if later. In other words, the same-sex spouse may be treated as being covered by the FSA. Thus, coverage may be available for a plan year beginning on January 1, 2013.
- The maximum annual deductible contribution to one or more HSAs for a married couple if either elects family coverage under a high-deductible health plan is $6,450 for 2013. This deduction limit applies to same-sex married couples now treated as being married for federal tax purposes this year. So same-sex couples effectively have until December 31, 2013, to get hitched and still qualify for 2013 deductions.
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