Tax Tips for Same-Sex Couples

Five ways you can avoid the headaches during tax season

Photo by Think Stock

The Defense of Marriage Act (DOMA) may mean that the federal government won’t recognize gay and lesbian couples who marry – but that doesn’t mean they aren’t required to file taxes as if they were, one of the little-known recent changes to IRS tax codes. If this has you scratching your head, you’re not alone. But there are a few ways to, as Barry Manilow might say, make it through the rain. Or at least tax season.

“There are an estimated 350,000 gay and lesbian couples affected by these changes, but often even the IRS isn’t clear on its own rules, and that has created chaotic situations for many same-sex couples,” says Elisha Wiesenberg, an L.A.-based tax preparer who specializes in tax issues for same-sex couples.

Wiesenberg says his clients are often frustrated by the system in place for registered domestic partners and same-sex married couples, but advises that patience can pay off. “New Federal guidelines obligate RDPs and same-sex married couples to combine their income and split it,” he says. “On the whole, it’s a more favorable way to file, so it’s tempting to think of this as a little bit of compensation for the complexity involved in preparing returns.”

The good news is there are simple steps same-sex couples (married, unmarried and domestic partners) can take to make the upcoming tax season a whole lot easier:

1.  Consult with a qualified tax adviser.

“At-home software programs are great for simple tax situations, but registered domestic partners can have enormously complicated returns,” Wiesenberg says. “The new federal guidelines obligate RDPs and same-sex married couples to combine their income and split it, and at-home tax software just isn’t capable of handling these situations.”

2.  Understand your partner’s financial situation.

If you don’t already have a clear grasp of both partners’ financial situations, now is the time to have those conversations. Understand income and debt obligations. “If you don’t already know everything there is to know about your partner’s finances, by the end of April, you will,” Wiesenberg says.

3. Put your financial documents together.

Even if you keep separate financial records, from a tax standpoint, you are seen as a couple – so compile your documents as such, making sure to keep individual items in order, but have them ready to be combined.

4.  File powers of attorney and tax authorizations.

IRS Form 8821 and IRS Form 2848 are important to have filled out and sent to the IRS prior to seeing a tax preparer. “You may need to discuss each others’ taxes with the IRS,” explains Wiesenberg, “but even though you’re filing as a couple, the federal government and IRS don’t permit you to talk about each others’ taxes or make decisions without the proper forms.”

5.  Get ready to take notes.

Both spouses or partners should be prepared to keep detailed records of their conversations – whether with a tax adviser or, especially, when communicating with the IRS.