DOMA and Same-Sex Couples

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DOMA and Same-Sex Couples

Recent new reports state that the State of Maine will start issuing marriage licenses to same sex couples before the end of the year (2012).  A few other states are in the process, if not already issuing licenses.  Couples who are married by the end of the year may want to consider consulting with a tax professional before filing their tax returns next year.  In particular, the Supreme Court may overturn the Defense of Marriage Act (DOMA) in 2013.  Current federal law prohibits same-sex couples from taking advantage of favorable tax treatment provided to married couples, such as the Joint Filing Status and Estate tax Marital deduction.  If DOMA is overturned, then it is thought that same-sex couples will be provided similar favorable treatment.  Couples may want to speak to a tax professional about filing a protective claim for refund before the Supreme Court rules on the DOMA issue. It is thought that a protective claim for refund would freeze the general 3-year statute of limitation that normally applies to a claim for federal tax refund.  Same-sex couples who were married in other states or countries that recognize same sex marriage may also want to speak to a tax professional about filing a protective claim.  Time is of the essence for any same-sex couple who were married in 2009 and are considering amending their federal tax return for that year.  Their ability to claim a refund  on an amended return for tax year 2009 will expire April 15, 2013. (Refund claims for payments made on any debt for that year expire two years from the date of payment or on April 15, 2013, whichever later).

To make matters more complicated, same-sex couple may want to consider consulting with a tax professional even if DOMA is NOT overturned.  The tax code looks to state definitions of marriage in many instances, including the Earned Income Credit, Dependency Exemption and the Adoption Credit.  Same-sex couples may now be able to claim a spouse’s child for the Earned income Credit or the Dependency Exemption, or both, in situations where they could not before they were married.  Please note that I am speaking in generalities here and not to your particular situation.  I recommend that you consult with a qualified tax professional before you take any position on a tax return.       

We're not giving tax advice here, but just to be safe:

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

November 2012