SAME-SEX COUPLES – ARE YOU DUE A REFUND FOR PENNSYLVANIA INHERITANCE TAX OR PENNSYLVANIA REALTY TRANSFER TAX?
As most know, same-sex marriage is now officially legal and recognized by the Commonwealth of Pennsylvania. As explained by the Inheritance Tax Bulletin 2015-01 and Realty Transfer Tax Bulletin 2015-01 issued on February 25, 2015, the decision in Whitewood v. Wolf, 992 F. Supp. 2d 410 (M.D. Pa. 2014) impacts the tax rates for same sex couples and their children. Now, same sex spouses have the same rights and benefits under the Inheritance and Estate Tax Act, and are considered spouses when determining inheritance tax rates.
While previously the survivor of a same sex couple was taxed at 15%, the surviving spouse is now entitled to the spousal rate of 0% for Pennsylvania Inheritance tax. Similarly, children of any same sex couple are considered a lineal heir/s, and are entitled to a 4.5% Pennsylvania Inheritance tax rate.
While this rule applies to future transfers, individuals are also entitled to a tax refund if they paid tax at the previous 15% rate for inheritance received from their same sex spouse, or the spouse of their parent. The only caveat is that applications for refunds must be made within three years after the initial taxes were paid.
The same rule applies to Realty Transfer Taxes. Same sex couples are now eligible for the spousal exemption from the Realty Transfer Tax and may apply for a refund for Realty transfer taxes paid within the past three years. (Amanda Kita, Esquire – June 5, 2015)