As we anticipated in a previous post, the New York State Department of Finance and Taxation (“Department”) has issued guidance concerning the state tax impacts of the Marriage Equality Act (“Act”) on employees and employers.
Same-sex couples who are married as of December 31, 2011 will be required to file their New York State return under “married” status. However, their marital status remains unrecognized for federal tax purposes due to the continued recognition of the Defense of Marriage Act. Therefore, employers and employees should be mindful that for certain employee benefits, employees who are part of a same-sex married couple may be subject to tax on the federal level but not on the state level. For instance, the Department’s guidance notes that employers should not withhold tax for New York income tax purposes on the value of same sex spouse’s health benefits, even though the same benefit would be subject to federal withholding.
Further Department guidance on withholding tax information regarding same-sex married employees can be found at http://www.tax.ny.gov/pit/withholding_mea.htm.