In one of the same-sex marriage cases before the Supreme Court now, Edie Windsor is applying for a refund on the $363,053 she had to pay on the estate of her wife, Thea Spyer, because she was not granted the marital deduction on federal estate taxes.
'PROTECTIVE REFUND'
The paperwork clients should file is called a protective refund claim, and they should file it as soon as possible, said Philip T. Davies, an estate attorney in New York. “The law may be in some state of flux, but it's always better to file promptly (including corrective claims) based on your best rational and reasonable position, rather than wait for the law to be clarified,” he says. “Were we to wait forever there would have been no Boston Tea Party.”
The statute of limitations on tax refunds is ordinarily three years, says Matthew Erskine, an estate tax lawyer whose Worcester, Mass., firm also provides family office services. But gay and lesbian clients may get a break on timing; he notes that the IRS has extended filing windows in the past for “unusual circumstances,” and adds that a change in federal treatment of marriage could constitute such a circumstance.
OTHER BENEFITS
Depending on how the high court rules, married same-sex couples may also be able to take advantage of “numerous other federal tax provisions that provide benefits to married persons,” Florida tax attorney Charles Rubin has noted in his Rubin on Tax blog.
Among the provisions that Rubin suggests cites: “(a) the federal gift tax marital deduction, (b) joint tax return filing rates and permissions, (c) favorable “stretch” and rollover provisions for IRAs and other qualified retirement plan distributions to a surviving spouse, and (d) portability of unified credit amounts between spouses."
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