The vast majority of those in the San Francisco Bay area, who are preparing to file their personal income tax returns on April 17, do so in the belief that they are filing honest and error-free tax returns. Those in the lesbian, gay, bisexual and transgender community including couples in same-sex marriages or registered domestic partnerships, may have questions about just what the IRS code means to them and how they should comply with this ambiguity.
When federal and state laws are in conflict, it can create legal gray areas. For those in the LGBT community, there is a tax controversy surrounding the IRS tax code, the Defense of Marriage Act and California laws. The IRS is attempting to clarify the issues, but there are still dilemmas being faced by diligent taxpayers.
According to a news source, one of the issues is related to community property – specifically line 21 on a tax return. When a same-sex married couple or registered domestic partners claim joint income (as for example from a business) they need to split that income equally. However, that adjustment that they note on line 21 may not be in sync with other income that is reported to the IRS via W2s. This results in error notices from the IRS.
Additional tax controversy is created by IRS agents and less-informed tax preparers who are attempting to satisfy federal laws and state laws at the same time. According to sources, not all IRS agents are trained in tax issues related to same-sex couples or registered domestic partners.
For now, the recommended advice is for same-sex married couples to obtain tax assistance from a qualified professional, and not to trust online software programs which are ill-equipped to handle the nuances of this particular tax controversy.
Our intention is that readers of this blog will be notified should the IRS provide additional clarification of the code as it applies to same-sex couples and registered domestic partners.
Source: The Bay Area Reporter, “Advocates, IRS try to help LGBT tax filers,” Matthew S. Bajkko, March 15, 2012