There were two important Supreme Court rulings that were handed down the other day with tax ramifications, discussed below:
In 2013, the Supreme Court ruled that same-sex couples had a constitutional right to marry, but that ruling was only applicable for federal purposes. States were not required to follow the ruling and some states, including Georgia, chose to continue the practice of not recognizing same-sex marriages. That led to another Supreme Court battle (Obergefell), the ruling on which was just handed down. Writing for the majority, Justice Kennedy said that “the Fourteenth Amendment requires a State to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-State.”
Now, for both federal and Georgia purposes, a same-sex couple legally married by the end of 2015 will file tax returns using either the Married Filing Joint or Married Filing Separately tax rate brackets (and would do so for the entire year no matter when they get married). Such couples should also look at possibly amending tax returns for any open years to change their filing status if doing so would generate tax refunds.
Subsidies for health care purchased on Federal Exchange
Upholding a key provision of the Affordable Care Act, the Supreme Court ruled in King v. Burwell that the premium tax credits under Code Sec. 36B aren’t limited solely to taxpayers who live in states that have established a Health Insurance Exchange. Writing for the majority in the 6 – 3 decision, Justice Roberts affirmed that the credits (also known as health insurance subsidies) are also available to taxpayers residing in States that have a Federal Exchange. The Court concluded that the logical interpretation was that the subsidies were intended to be available for insurance purchased on any Exchange— State or Federal.
This was an important provision for “Obamacare” advocates since the subsidies are designed to make health insurance affordable for taxpayers who meet certain qualifying requirements. Without it, the opposition believed Obamacare could not survive. https://wblcpa.com/2015-briefing-on-supreme-court-rulings/Accordingly, the Court put an end to what many thought was one of the most likely efforts to defeat the Affordable Care Act.
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Please let any member of the WBL tax team know if you have any questions. In the meantime, we continue to monitor legislation and case law that might impact our tax consulting and compliance services.