Issue #6. SAME SEX MARRIAGES: Below we have described the numerous ways that DOMA changes how same-sex marriages are treated when it comes to taxes:
MARTIAL STATUS: For Federal tax returns, same sex married couples cannot file under married status. Therefore, their tax status upon divorce does not change on their federal returns.
ALIMONY: Because same-sex former spouses cannot be considered spouses for federal tax returns, they cannot take a tax benefit associated with a former spouse. Therefore, alimony payments made to a same-sex former spouse do not qualify as tax deductible income to the payor and cannot be categorized as alimony payments for federal tax purposes.
PROPERTY TRANSFERS: Because same-sex spouses and former spouses cannot be considered spouses for federal tax purposes, the exemption on capital gain realizations for transfers between spouses does not apply. Similarly, the transfers of retirement accounts allowed by QDRO between former spouses is not permitted between same-sex spouses. The inability to transfer retirement assets without tax implications can severely inhibit the ability to divide marital assets sensibly.
These limitations imposed by DOMA create extra considerations that must be made in dealing with same-sex divorce cases.
Click here to read Divorce and Taxes: Issue #1. Marital Status.