The City of Ithaca vowed Tuesday to help employees in same-sex marriages receive refunds for federal taxes paid on spouses’ medical insurance, the Ithaca Journal reported.
Ari Levine, the City Attorney, announced that Ithaca can request the IRS to refund the taxes and will file amended W-2 forms on behalf of the employees. The assistance is good news for local same-sex couples as many others across the country are finding it difficult to navigate new tax benefits, as well as penalties associated with marriage.
Couples can retroactively claim refunds according to the new law for the previous three tax years. Last year, the Supreme Court struck down the Defense of Marriage Act (DOMA), specifically ruling in the Windsor v. United States case that the IRS cannot deny marriage tax benefits to people in states that recognize same-sex marriage. New York became the seventh state to legalize same-sex marriage in 2011.
The Huffington Post outlined key benefits the new law affords:
- Deductions and Credits for Dependents — If you file married filing jointly, you will be able to take tax deductions and credits for your children, other dependents, or your spouse.
- Dependency Exemption — The dependency deduction may mean an additional tax deduction of $3,900 per dependent and an additional $3,900 exemption for your spouse.
- Earned Income Tax Credit — When you file as a married couple you may be eligible for an Earned Income Tax Credit worth up to $6,044 for 2013.
- Education Credits and Deductions — Education is expensive, you may be able to claim a tax deduction on your taxes of up to $4,000 for your dependent or spouse’s education.
- Lower Tax Rates When Filing as a Married Couple
- Easier Tax Preparation and Savings on Costs
- Savings for Families
However, it’s not all good news. Some couples may find that it is not worth it to re-file, as the Wall Street Journal recently reported. Those couples with combined six-figure incomes could find themselves placed into higher tax brackets and losing tax credits they previously qualified for. Still, it pays for couples to investigate and see how they are affected.
Lavine also told the Ithaca Journal the city is willing to work with other big employers’ in the area who are considering similar action.