federal guidelines for same sex marriage?

[taxmom34]

i received a call today,(person married )was told she was disqualified for health insurance coverage because of federal guideline re same sex marriage and employer is adding imputed income of $9,000 on her W2? she was told she had to apply for single coverage for her spouse, and single for herself.
she is legally married in massachusetts and files MFJ on her tax return. so why is she disqualified? anyone in the know, she is panicking because of the amount they will be attaching to her pay next year, help?

[Bees Knees]

A same sex marriage in MA cannot file a federal return as MFJ. Public Law 104-199 says:

In determining the meaning of any Act of Congress, or of
any ruling, regulation, or interpretation of the various administrative
bureaus and agencies of the United States, the word ‘marriage’
means only a legal union between one man and one woman as
husband and wife, and the word ‘spouse’ refers only to a person
of the opposite sex who is a husband or a wife.

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=104_cong_public_laws&docid=f:publ199.104.pdf

Thus, it does not matter whether state law allows for same sex marriage. No federal law or regulation can recognize it for federal tax purposes. Thus, unless the same sex partner can qualify as a dependent of the employee under Federal dependency rules, the same sex partner cannot have his/her benefits excluded from income under the fringe benefit rules.

[joanmcq]

Exactly. The benefits are included as income in box 1, but, at least in CA, are not taxed as state wages. It becomes a state adjustment to income. Your client should have increased federal withholding to cover the federal tax portion.

[taxmom34]

thanks for input

she was told that she had to pay the employer, i was assuming that they would add the $9000 to her W2 and she would pay when she files her return, am i right? new question: is this subject to FICA?

[erchess]

Federal Defense of Marriage Act

What is the worst that could happen to the preparer of MFJ Federal and NC Returns for a same sex couple who lost out in front of the Supreme Court?

In light of the severity of potential penalties is it likely that a competent Tax Professional could be found to prepare such a set of returns?

[taxea]

I don't understand how this could have happened if the return was prepared by a professional. I have never seen anything that indicates that the IRS recognizes a same sex marriage for MFJ purposes.

If the preparer had prior knowlege that the clients were same-sex then the preparer could be in trouble. If the preparer had no knowlege of the couple being same-sex; one party was client, did not disclose the spouse was of the same sex, name of spouse did not trigger a question by the preparer as to the sex of the spouse, etc then amending the return by preparing two single returns with a written statement of explanation should take care of the problem. taxea

[taxmom34]

i believe this woman filed her own return, she has little knowledge of tax issues but claims to know more than most. and because of this attitude has put herself in trouble with her employer and now is seeking advice on newest screw-up.

[taxea]

federal guidelines for same sex marriage?

Don't you just love it! do you charge for client stupidity or arrogance?

Actually I figured that was the case. Because the state recognized the marriage the ignorant tax payer figures they can MFJ. Nothing like not reading the instructions.taxea

[Bees Knees]

In 1987, 11 million children disappeared from the U.S.

That was the first year you had to put your dependent's Social Security number on the return.

I don't think same sex marriage is high on their list when they audit MFJ. Just leave one spouse home during the audit and nobody will care.

[taxea]

federal guidelines for same sex marriage?

"I don't think same sex marriage is high on their list when they audit MFJ. Just leave one spouse home during the audit and nobody will care."

Where can I find this in the tax code?

As a professional preparer I'm sure you are kidding, right? taxea

[erchess]

My Earlier Post was unclear so I will rephrase

What is the worst that could happen to a tax professional who knowingly prepared MFJ Returns (Fed and NC) for a same sex couple who when challenged by one of the taxing agencies, took their case to the point of appealing to the Supreme Court but lost?

I simply intended to suggest that the penalties are likely large enough that as taxea suggested, few competent preparers would do this. If that's right, then it would follow that the more likely source of the eventual challenge to the law in question will be a couple with a marriage recognized by Mass that moves to some other State and sues that State on the basis of the idea that in general States must recognize each other's marriages and other acts. Or they might, even while in Mass, think of some basis for suing the Federal government over the recognition of their marriage.

[taxea]

My only interest in this forum is discussing tax prep issues...and how they may affect my EA license.

I would think that the IRS could suspend one's EA license as well as pull the authority to efile returns. The other thing I suspect they would do is inspect all prior returns prepared by the preparer. Possibly even a fine and if they feel they can prove intentionally filing a fraudulent return there could even be criminal charges against the preparer. taxea

[erchess]

taxea

I think your points about what the IRS would do if they stumbled across the situation I postulated seem reasonable. I therefore conclude that the preparer postulated is an idiot almost beyond belief. There is no human folly totally beyond belief.

I also think Bees was right. I understood him to be saying that there are some wrong things on tax returns that the IRS actively searches for and others that it only acts on when circumstances force it to acknowledge the existence of a situation and that qualifications to be married are in the latter category.

I don't know about anyone else but because of where I practice I get regular inquiries from same sex couples wanting to know if they can file jointly now or are likely to be able to do so in the future. All I know for certain is that unless we are talking about a return for Mass they can't do so now without risking more trouble than they know what to do with or at least more than I am willing to be a part of.

[Bees Knees]

"I don't think same sex marriage is high on their list when they audit MFJ. Just leave one spouse home during the audit and nobody will care."

Where can I find this in the tax code?

As a professional preparer I'm sure you are kidding, right? taxea

As a professional, I would never file a MFJ return for a same sex marriage couple. I was the one who provided the citation to the law that forbids it.

Having said that, as a professional, I really do not believe it is high on the IRS list of audit issues. Do a search of all IRS Pubs, forms, and instructions. I did. I could not find any reference to same sex marriage forbidding MFJ filing status. Why? If it was so high up on IRS radar, wouldn't you think the instructions would say "same sex marriage couples cannot file MFJ for federal tax purposes?"

Maybe I am blind, but I cannot find those instructions anywhere in IRS Pubs, forms, or instructions.

[Bees Knees]

BTW, there is one reference to domestic partners in Pub 555 (and also in the 1040 instructions). It says:

California domestic partners. If you are a registered
domestic partner in California, the rules discussed in this
publication for reporting community income do not apply to
you. You must report all wages, salaries, and other compensation
received for your personal services on your own
return. Therefore, you cannot report half the combined
income that you and your domestic partner earned as a
married person filing separately does in California.

I can guess from that statement that the same ought to be true about not being able to file MFJ. But that is only because I know about the Public Law on the subject. Again, why doesn't IRS come out in their instructions and tell these people in those states that allow same sex marriage that they cannot file MFJ on the federal return?