Same-Sex Marriages and Social Security
The unprecedented Supreme Court ruling on the Defense of Marriage Act that gave same-sex married couples the same rights to benefits as opposite-sex married couples left some confusion about how same-sex couples living in a state in which gay marriage was not allowed would be affected – especially when it came to Social Security benefits.
The Supreme Court made an historic ruling in 2013 when it abolished Section 3 of the Defense of Marriage Act (DOMA) and gave same-sex couples the right to receive the same benefits as straight married couples. In the wake of this ruling, however, it was unclear as to whether benefits would extend to same-sex couples who were married in a state that recognized gay marriages as legal but lived in a state that did not. As time has passed, the details of the ruling have become more transparent. Taxes for Expats now examines the joint Social Security benefits made available to same-sex couples.
Extending spousal benefits of Social Security to same-sex couples enables partners involved in gay marriages to rely on the security and protection of Social Security that traditional families enjoy.
Spousal benefits being made available to same-sex couples makes it possible for both partners to receive Social Security benefits when one or the other reaches full retirement age. When a spouse retires and becomes eligible for Social Security, the lower-income spouse can either collect Social Security benefits of his/her own work history or collect half the benefit amount of the retired spouse – whichever amount turns out to be the highest.
Another option for the higher earning spouse is to ‘file and suspend’ at full retirement age. This enables the lower earning spouse to receive Social Security distributions and continue to work and pay into his/her Social Security and continue receiving credits for future benefits.
Spousal benefits are also made available if one spouse becomes disabled before full retirement age – even in the case of divorce.
An individual can become disabled at any point during a lifetime. Many disabilities occur before full retirement age is reached. When one spouse becomes disabled, the other can receive Social Security benefits calculated on the lifetime contributions of the disabled spouse. This is especially beneficial if the higher-income spouse is the one to become disabled. These benefits are available even in cases in which divorce has separated the two spouses, and this benefit has been extended to same-sex couples.
Death benefits and survivor benefits are made available to same-sex couples when the surviving spouse reaches the age of 60, assuming the couple was married for a term of at least 9 months before the death of a spouse.
When one spouse in a marriage passes away, a lump-sum survivor benefit of $255 is paid to the spouse who survives the other. If the surviving spouse is age 60 or older, survivor benefits based on the deceased spouse’s earnings would kick in. If the surviving spouse is not yet 60, he/she would have to wait to reach this age before the survivor benefits would commence. This benefit is also extended to same-sex couples as long as the marriage lasted at least 9 months prior to death.
When a parent becomes disabled or passes away, an unmarried child – whether natural or adopted – up to the age of 18 (or age 19 if the child is a student) may receive Social Security benefits based on the disabled or deceased parent’s work history.
For the purpose of Social Security benefits being extended to children in the event of a parent’s death, ‘parent’ is defined as having a child either by natural means or through adoption. If a child is unmarried and age 18 or below (19 if attending school full time), the child can receive Social Security benefits under the deceased parent’s work history. This is also true if a parent becomes disabled. Same-sex couples with children are just as eligible for these benefits as traditional married couples.
The United States recognizes same-sex marriage the Americas and in foreign countries, and same-sex married couples are now required to file a US expat tax return as ‘Married Filing Jointly’ (MFJ) or ‘Married Filing Separately’ (MFS).
In past years, gay couples were forced to file their individual US income tax returns as ‘Single’. Now that the United States recognizes gay marriages as valid and extends to them the same rights that are available to traditional married couples, members of a same-sex marriage must either file as MFJ or MFS. If you need help determining the most advantageous method of filing, make sure to speak with a seasoned US expat tax professional.