Tax Problems For Same-sex Couples Since The Doma Strike Down

When the Supreme Court struck down DOMA, states that recognize gay marriage allowed same-sex couples to have a federally, legal marriage. They now have Social Security benefits and federal tax benefits. This exists for the 13 states which recognize same-sex marriage.

However, there are many foreseeable future issues here; such as, will the federal government recognize the marriage based on the residence of the same-sex couple or where the marriage ceremony was performed? If one of these places is in a non-recognition state, it will pose legal problems for these couples as their rights may not be recognized as a heterosexual couple’s rights would.

In the realm of taxes, the same-sex couple may face some problematic results, both during and after a divorce. In a typical divorce, a stipulated agreement may be reached which involves paying some portion of money or property to equalize the community estate so that each party is receiving an equal value in the division of assets and debts. These equalizing transactions are non-taxable events for the heterosexual couple or the couple living in a gay marriage recognized state. However, for the same-sex couple in a non-recognition state, the marriage is not federally recognized as legal and that same-sex couple will not benefit from these non-taxable events that the other divorcing couples will enjoy.

Furthermore, until we can properly define the term spouse in non-recognition states or in circumstances where the couple marries in a recognition state and moves to a non-recognition state, many unanswered questions will persist – such as will child support be taxed in a non-recognition state or in a situation where the divorced party is not considered an ex-spouse? Or, how will life insurance, health insurance, and retirement benefits be divided when one spouse is not considered a spouse so, in turn, is not an ex-spouse?

In all likelihood, it will take many years to answer these questions as it will take a long time for the government, court, tax, and IRS rulings and codes to redefine these situations under this new era of same-sex marriage law.