1. De-Mystifying Same-Sex Tax
Issues In Light of DOMA
Jason T. Dinesen, E.A.

2. What is an Enrolled Agent?
• I don’t work for the IRS!
• Licensed by the Department of the Treasury
• Have the same rights and privileges as
attorneys and CPAs when it comes to dealing
with the IRS
• Only EAs are guaranteed to specialize in
taxation

3. The Plan for Today’s Clinic
• DOMA
• The Federal Tax Return
• The Iowa Tax Return
• Additional Issues to be aware of

4. DOMA
• The Federal Defense of Marriage Act of 1996
(DOMA) defines marriage as one man, one
woman. Period.
– Applies for all federal purposes, including taxes
– But states are free to define marriage however
they want

5. A World Without DOMA
• If DOMA didn’t exist, same-sex married
couples would file tax returns as married

6. IT’S COMPLICATED
• This complicates how same-sex couples file
tax returns
– Single or Head of Household on federal return
– Married on state return
• Recalculations!

7. Today’s fundamental question is:
given that DOMA restricts the
federal government from
recognizing same sex marriage but
the state recognizes it, how do you
actually file your taxes?

8. THE FEDERAL RETURN

9. CHOOSING A FILING STATUS
• On a federal return, the only allowable filing
statuses are
– Single
– Head of Household
• On Iowa tax returns, same-sex married
couples must use one of the “married” filing
status

10. Head of Household Filing Status
• Must be unmarried or
treated as unmarried
• Must have paid more than 50% of the
maintenance costs for the home of a
qualifying person
– A “qualifying person” generally means a child
– “Maintenance of a home” means rent, mortgage
payments, property taxes, food and utilities

11. Who Can Claim the Kids?
• If both spouses are legally the child’s parents,
then the spouses can decide for themselves
who claims which kids as dependents
– Can be useful for planning purposes – determining
HOH status, Earned Income Credit, etc.
• If only one spouse is the child’s legal parent,
then the legal parent is the only person who
can claim the child
– Even if the legal parent doesn’t claim the child

12. Can One Spouse Claim the Other as a
Dependent?
• Maybe
– The spouse cannot be considered a qualifying child of
someone else
– Must meet the “member of household test”
– Gross taxable income must be less than $3,800
– You must have provided more than ½ of your
partner’s support for the year
• Even if you can claim your partner as a
dependent, you will not qualify for Head of
Household filing status or for the Earned Income
Credit unless you also have kids

13. THE IOWA STATE RETURN

14. Choosing an Iowa Filing Status
• There are 3 to choose from:
1. Married Filing Jointly
2. Married Filing Separately on a Combined Return
3. Married Filing Separately on Separate Returns
• Iowa has one income tax bracket, regardless of
filing status
• Married Filing Jointly is usually a bad filing
status for dual-income couples

15. More About Iowa Married Filing
Separately
• On separate returns, spouses must SPLIT
itemized deductions based on income
– This is true with either of the “separate” statuses
• The net end result is the same under
either filing status
• The difference between the two statuses
involves liability for the tax return

16. • SINCE THE IOWA RETURN IS
BASED ON THE FEDERAL
RETURN, HOW DO WE FIGURE
OUR STATE TAXES IF WE ARE
MARRIED?

17. Mock Return
• Same-sex married couples must prepare a
“mock” joint federal return to use in preparing
the state return.
– The return is not filed
– It is prepared as if you were married for federal
purposes
– Can be as simple as just combining your W-2
income … or it can get really, really complicated
– And Iowa has issued no guidance as to what items
they expect to be recalculated

18. Taxability of Health Insurance
• You will be taxed on the value of benefits,
such as health insurance, provided to a same-
sex partner
– Unless you can claim that partner as a dependent
– Benefits should NOT be taxable if you could claim
your partner as a dependent except that your
partner’s income is above $3,800.
• Iowa does not tax these benefits

19. Gift Tax
• What is a gift?
– Property transfers, such as placing title to a house
in your spouse’s name as a joint owner.
• THE IRS IS CRACKING DOWN HARD ON THIS –
REQUESTING PROPERTY RECORDS FROM STATES