Marriage Equality Act: How to Set Up Same Sex Domestic Partner Benefits as Non-Taxable for the State of New York
(Doc ID 1354138.1)
Last updated on JUNE 19, 2019
Applies to:Oracle HRMS (US) - Version 220.127.116.11 and later
Information in this document applies to any platform.
Need instructions on how to set up the Same Sex Domestic Partner Benefits as non-taxable for the State of New York while they are still taxable on a Federal level.
The New York State - Department of Taxation and Finance
Marriage Equality Act
The Marriage Equality Act (Act) took effect on July 24, 2011, and provides that all marriages, whether between same-sex couples or different-sex couples, will be treated equally under the laws of New York.
The Act amends New York law to recognize all legally performed marriages between same-sex and different-sex couples, whether or not the marriage took place in New York.
The Act applies to all taxes administered by the Tax Department. As a result, any references in the Tax Law or department documents to:
- spouse or married individual includes a person in a marriage with a same-sex spouse
- husband, wife, and spouse should be read as gender neutral to reflect both different-sex and same-sex couples
- marriage also includes a marriage between same-sex spouses
For more information see:
TSB-M-11(8)C, (8)I, (7)M, (1)MCTMT, (1)R, (12)S, The Marriage Equality Act
The Marriage Equality Act
The Marriage Equality Act (Act) was signed into law as Chapters 95 and 96 of the Laws of 2011, on June 24, 2011. One purpose of the Act is to provide that all marriages, whether of same-sex couples or different-sex couples, will be treated equally under all laws of the state. Accordingly, the Act applies to all taxes administered by the Tax Department as of the effective date of July 24, 2011.
The Marriage Equality Act provides that no government treatment or legal status, effect, right, benefit, privilege, protection or responsibility relating to marriage, whether deriving from statute, administrative or court rule, public policy, common law or any other source of law, will differ based on the parties to the marriage being or having been of the same sex rather than a different sex. When necessary to implement the rights and responsibilities of spouses under the law, all gender-specific language or terms will be construed in a gender-neutral manner in all sources of law. The Act applies to all legally performed marriages, whether or not the marriage took place in New York. The new law took effect on July 24, 2011.
The Act applies to all taxes administered by the Tax Department. Although the Act applies to all taxes, the taxes principally affected are the personal income tax and the estate tax. The effects on these taxes are summarized as follows:
Personal income tax.
Same-sex married couples must file New York personal income tax returns as married, even though their marital status is not recognized for federal tax purposes. This means they must file their New York income tax returns using a married filing status (e.g., married filing jointly, married filing separately), even though they may have used a filing status of single or head of household on their federal returns. In addition, to compute their New York tax, they must recompute their federal income tax (e.g., their federal income, deductions, and credits) as if they were married for federal purposes.
For personal income tax purposes, the Act is effective for tax years ending on or after July 24, 2011. Same-sex married couples who are married as of December 31, 2011, will be considered married for the entire year. They must file their returns using a married filing status starting in tax year 2011. The Act is not retroactive. Therefore, a same-sex married couple who was legally married in another state prior to July 24, 2011, is not married for New York tax purposes until July 24, 2011, and may not use a married filing status prior to tax year 2011.
The New York taxable estate of an individual in a marriage with a same-sex spouse must be computed in the same manner as if the deceased individual were married for federal estate tax purposes. Accordingly, the same deductions and elections allowed for different-sex spouses are allowed for same-sex spouses, whether or not a federal estate tax return is filed. For New York State estate tax purposes, the Act takes effect for the estates of decedents who died on or after July 24, 2011.
The Tax Department will be posting additional guidance regarding the Act on its Web site (www.tax.ny.gov) as it is developed.
NOTE: A TSB-M is an informational statement of existing department policies or of changes to the law, regulations, or department policies. It is accurate on the date issued. Subsequent changes in the law or regulations, judicial decisions, Tax Appeals Tribunal decisions, or changes in department policies could affect the validity of the information presented in a TSB-M.
Personal income tax information for same-sex married couples
Same-sex married couples must file using a married filing status for tax year 2011 and after
You must file your New York personal income tax return(s) using a married filing status even though your marital status isn't recognized for federal purposes. Because the law only applies starting for tax year 2011, you can't amend a prior year return or file a 2010 return that is on extension using a married filing status.
To complete your New York return you must recompute your federal income tax return (including all credit forms, schedules, and other attachments) using a married filing status, applying all the federal rules for married taxpayers. Don't submit this federal as if married return to the IRS. Use it only to complete your New York return and keep it with your tax documents.
If you make estimated tax payments you should recompute your estimate based on a married filing status.
The New York State Department of Taxation and Finance
Withholding tax information regarding same-sex married employees
Withholding tax information regarding same-sex married employees
Same-sex married employees
You may want to file a new Form IT-2104, Employee's Withholding Allowances Certificate, with your employer because you'll file a New York return using a married status beginning in tax year 2011.
Provide proof to your employer that you're legally married to have them stop withholding New York tax on the value of certain benefits (e.g. domestic partner health care coverage). This applies if your federal taxable wages subject to withholding include the value of the benefits, and the value of these benefits wouldn't be included in taxable wages if provided to a different-sex married spouse.
Don't withhold New York tax on certain benefits provided to a same-sex married employee. You don't need to withhold tax for New York State, New York City, or Yonkers income tax purposes on the value of certain benefits (e.g. domestic partner health benefit), even though it's subject to federal withholding. This applies if the employee's federal taxable wages subject to withholding include the value of the benefits, and the value of these benefits wouldn't be included in taxable wages if provided to a different-sex married spouse.
When reporting the annual wage totals on Form NYS-45, Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, Part C, column d; report the federal wages minus any amount of benefits discussed above that you don't withhold on for New York purposes (plus any amount of any taxable 414(h) retirement contributions and any IRC 125 amounts from a New York City flexible benefits program for governmental employees).
Continue to use the rules described in the NYS-50, Employer's Guide to Unemployment Insurance, Wage Reporting, and Withholding Tax for reporting State and local wages on federal Form W-2, Wage and Tax Statement.
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