MA DoR Gives Guidance For Same-Sex Marriage Tax Issues

July 20, 2004 (—Earlier this month, the Massachusetts Department of Revenue (DoR) released Technical Information Release (TIR) 04-17 to clarify the implication of same-sex marriages in Massachusetts on both state and federal tax issues.

The TIR addresses issues regarding income reporting and withholding requirements for employer-provided health benefits due to the different definitions of “marriage” and “spouse” under the federal Internal Revenue Code andMassachusetts tax law.  

Massachusetts is the only state to allow same-sex couples the right to marry and enjoy all the legal rights and privileges granted to married couples under Massachusetts law.   However, those same benefits cannot be afforded under federal law because the 1996 Federal Defense of Marriage Act (DOMA) defines a marriage as a union between a man and a woman, and allows states to ignore same-sex marriage licenses coming from other states. The law governs all retirement plans and federal tax circumstances, since the IRS defers to the DOMA.

This means that same-sex spouses must treat federal andMassachusetts state taxes differently; same-sex spouses will file as married for state taxes but will remain individual filers, either single or head of household, for federal purposes.   “Where elements of Massachusetts taxation derive from federal law, such as the definition of gross income, or state deductions that are based on a federal counterpart, same-sex spouses may need to perform special calculations to arrive at the proper Massachusetts tax figure,” the information release says.  

Health benefits provided through an employer to employees’ spouses and dependents are not included in the employees’ gross incomes for both federal andMassachusetts tax purposes, the TIR states, adding that employees in cafeteria plans are usually allowed to pay a portion of their health insurance coverage on a pre-tax basis, which can include premiums for spouses and dependents.  

However, since the same-sex spouses are not recognized by federal law, the TIR clarifies that employer benefits extended to same-sex spouses generally will not be tax exempt unless the same-sex spouse qualifies as the employee’s dependent under Internal Revenue Code section 152.   If the spouse does not qualify as a dependent, then, according to the TIR, the fair market value of benefits provided to such same-sex spouses is included in gross income and is taxable federally to the spouse who receives the benefit from his or her employer, but is excluded from gross income for Massachusetts state reporting purposes.   For cafeteria plans, the contributions made for same-sex spouses are taxable to employees for federal income taxes.

The Department of Revenue TIR is available at