Karen is self employed and her partner is an employee, whose salary exceeds the social security maximum for social security taxes. Karen earns $140,000 from her business. It is all community income. According to IRS Publication 555, Karen will pay income taxes on only $70,000 of her income. Of course she will also pay taxes on half of her partner's W-2 income. The partner will get full credit for social security benefits ($106,800), but, according to Pub 555, Karen will be limited to $70,000 for social security benefits purposes. Can this be right? Read More ...

Remember that this year's tax deadline is April 18 rather than April 15. That is because Emancipation Day, April 16, the day that President Lincoln signed the Compensated Emancipation Act, is a legal holiday in DC. And since it falls on a Saturday this year, it is being officially celebrated on April 15, traditionally known as Tax Return Day. This holiday extends this year’s deadline for filing timely 2010 tax returns (or any other returns that otherwise would have been due on April 15) to April 18. If you are in a same-sex couple that is recognized by your state this April 18 deadline might be important to you regarding your 2007 tax year. Read More ...

Turbo Tax has announced that it is not going to be able to provide full support for RDPs and same-sex spouses who are required to split their community income and deductions on their federal tax returns. Read More ...

President Obama and Attorney General Holder have announced that they will stop defending the Defense of Marriage Act (DOMA) in court. But, they also say that executive agencies will continue to enforce the law. What does this mean for taxpayers who want to file tax returns claiming their marital status is valid? Read More ...

President Obama and Attorney General Holder say they will no longer defend Section 3 of DOMA in cases currently being litigated in federal court. But that does not mean that DOMA is gone. Read More ...

The IRS has revised Publication 555, which describes how the community property rules can affect the income tax reporting of couples who are subject to such rules. Read More ...

Many employers include the same-sex partner or spouse of an employee in their health insurance plans. But the federal taxation of these benefits is controlled by the Internal Revenue Code (IRC), a federal law that is subject to the provisions of DOMA (the Defense of Marriage Act). Most employers understand that health plan benefits are tax-exempt when extended to an employee's spouse, but that under DOMA a same-sex spouse does not count. So are benefits extended to same-sex spouses and partners automatically taxable? Read More ...

CCA 201021050 announced that the IRS will recognize the application of Poe v Seaborn to Registered Domestic Partners (RDPs) in community property states. Under Seaborn, partners are required to split their community income 50/50, no matter who earns the income. I get inquires almost every day from people who question whether or not this rule is mandatory or optional. I have answered this question before. The income-splitting rule is mandatory as of 2010. If you are still unsure about why, you might want to read the rest of this post. Read More ...

Many tax return preparers are dealing with community property issues for same-sex RDPs for the first time. Questions arise daily. A recent pressing question is: how do you report income earned by a partner in a non-community property state if the couple is domiciled in California? Yes, the income is split for federal purposes. But what about the state in which the income is earned? What if that state is not a community property state? Will it recognize income splitting? Read More ...

Michael Asimow, Professor of Law Emeritus, UCLA, and Visiting Professor, Stanford Law School, sent me an interesting inquiry the other day. It involves the question of how Same-Sex Married Persons (SSMPs) in California should file their state income tax returns. Some of us have been so busy focusing on how SSMPs file their federal tax returns that the question of how to file in California sort of slipped by us. Professor Asimow has accepted my invitation to write a guest blog post on the point. Read More ...

For tax year 2010, RDPs and SSM couples in community property states (California, Washington, and Nevada are the only states affected) must file their federal tax returns by splitting community income and deductions. There are substantive and procedural questions that have yet to be clearly answered on how exactly to file these returns. But a recent telephone conference call with IRS National Office Personnel has provided some essential information. Read More ...

The National Taxpayer Advocate, Nina E. Olson, has released her 2010 Report to Congress. Included in her list of Most Serious Problems is a six page discussion of the tax problems faced by same-sex Registered Domestic Partners. Read More ...

Scott James, writing for the New York Times, January 14, 2011, headlines his piece "For Same-Sex Couples, a Tax Victory That Doesn't Feel Like One." He?s talking, of course, about the requirement that California, Washington, and Nevada RDPs must split their community income and deductions. Read More ...

Happy New Year and welcome back to the Same Sex Tax Law Blog. Something important happened in December that I haven't yet mentioned on this blog. Congress finally gave us some tax certainty by enacting the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. I'll call it simply the Tax Relief Act of 2010. It gives us certainty (maybe) for two years - so already you know I'm being facetious. But the question I'll address in this post is this: what's in it for same-sex couples? Read More ...

I know the new IRS Publication 17 (available online) appears to say that RDPs in California, Nevada, and Washington may choose to split their community income. But it isn't really a choice. If it is community income, then the rule adopted in Poe v Seaborn, U.S. Supreme Court, 1930, applies and requires the splitting of community income. Read More ...

Many taxpayers and their tax advisers are confused by the Internal Revenue Service's apparent inconsistency regarding who can split community income on their federal tax returns. Some complain that they can find no binding authority to support the position that Registered Domestic Partners (RDPs) in California, Nevada, and Washington can split community income. Read More ...

A common question on tax accounting blogs is who gets to claim the mortgage interest deduction when the home is jointly owned. Or, who gets to claim the property tax deduction? Read More ...

When two people fall in love and decide to move in together, interesting tax questions arise about home ownership. Married couples don't have this problem. Statutes exempt spousal transfers from income and gift taxation. But these statutes do not apply to same-sex couples. Read More ...

On my inaugural welcome post to this blog I mentioned that the IRS has issued a CCA holding that California RDPs (Registered Domestic Partners) are covered by the holding in Poe v. Seaborn, a 1930 Supreme Court case that ruled all community income, including earned income from wages, was to be split between the spouses for income tax purposes. This post addresses questions about who should be covered by that CCA. Read More ...

This morning I woke up thinking about the estate tax. Will we continue to have one? Will the exemption of $3.5M be reinstated or will it revert to the meager $1.0M exemption, as scheduled for January 1, 2011. And, when I think of the estate tax, I think of Gertrude Stein and Alice B. Toklas. Why? Read on .. Read More ...

Many states recognize formally created relatioships of same-sex couples and treat them the same as spouses under their divorce laws. Some states recognize marriage (e.g., Massachusetts, Iowa). Some recognize Registered Domestic Partnerships or RDPs (e.g., California, Washington, Nevada, Oregon). And some recognize civil unions (e.g., New Jersey). If the state imposes alimony on a divorcing couple in any of these states, how will federal income tax law treat those alimony payments? This blog post addresses that question. Read More ...

When a same-sex couple, whose relationship is recognized by state law, divorces and one partner pays alimony to the other, what are the federal tax consequences? This blog post suggests some answers. Read More ...

The Internal Revenue Code provides numerous special provisions for spouses. At the current time none of these provisions applies to same-sex couples. This blog will consider what rules do or should apply to same-sex couples. Read More ...