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The IRS’ announcement that they will recognize all same-sex married couples became effective on September 16th.   While filing status is the change that is getting the most attention it is not the only significant tax consequence. The effects are far-reaching and provide several avenues for same-sex married couples to get money back from the IRS.

For years, same-sex couples have paid taxes on health benefits that their opposite-sex counterparts have received tax-free.  The Windsor decision has put a stop to this, thankfully, and the IRS is now allowing employers and employees to seek refunds of these taxes.  Last week, the IRS issued guidance on how to claim refunds of both FICA (Social Security and Medicare) and Federal Income Tax Withholding.

Since FICA taxes are reported and remitted by your employer, you will have to rely on them to get your money back.  Unless they are willing to reimburse you out-of-pocket, they will need to amend their payroll tax returns. You will want to discuss this with your employer; they may not know they are also eligible for a refund.

Luckily, the IRS has created special administrative procedures simplifying this process.  Employers typically must amend each quarter individually.  Under these circumstances, the IRS is allowing employers to amend all four quarters with one amended form.  The procedures also require that the employer file corrected W2s.

If your employer does amend their payroll returns it will only get the FICA taxes back to you.  To claim a refund for any income tax withholding, you will have to file an amended income tax return using the corrected W2. This will be a significant benefit to some but it is worth noting that the benefit is not necessarily greater than any negative consequences amending may have. If you are a taxpayer that would have paid more taxes as married filing jointly, amending to claim a refund of payroll taxes may not be worth it.

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