Even in MA, CA, Marriage Equality Not Equal at Tax Time
Even when states such as Massachusetts and California offer their residents marriage equality, when it comes to federal taxes gay families are still separate--and unequal.
An article posted at BankRate.com explains that under the provisions of the 1996 federal Defense of Marriage Act (DOMA), the federal government and all of its offices, including the IRS, are obligated to treat only mixed-gender couples as married, even if same-sex families might have been married at the state level.
That is generally not a problem for most people, until it comes to tax issues. Not only are the annual federal income taxes impossible for gay marrieds to file jointly; other tax issues, such as capital gains taxes for the sale of a home, are also affected by DOMA.
Explained attorney Jo Ann Cintron, who works out of Boston, MA, and has worked with same-sex couples going through divorce, "If two people get married, the federal government is not interested in that until they try to take advantage of a preferential tax treatment that is granted on the basis of marital status."
Added Cintron, "Once they attempt to avail themselves of that, the federal government takes notice."
For mixed-gender marrieds, that can mean a tax break on the sale of a principle residence of $500,000, whereas gay marrieds can only take the tax break available to single people, an amount of only half that much. Though it is the case that if both own the property jointly each of them can take the $250,000 break under certain circumstances, that would not be true in other situations, such as when one partner is a stay-at-home spouse.
Capital gains taxes are also more complicated for gay marrieds who get a divorce, because under federal law, their marriage was never recognized in the first place. Any property awarded to one ex-spouse from the holdings of the other can mean a federal tax bill is on the way.
Even at a state level divorce can be a messier business for gay families if they were married in one state but then lived in a state that does not offer marriage equality when they decided to divorce; because state laws then would not be set up to accommodate divorcing same-sex couples, a lawsuit might be necessary for one spouse to claim property or other support from the other, the article said.