Adoption Credit Issues of Same-Sex Married Couples

The New York Times ran an article last week about the IRS denying adoption credit claims of some same-sex married couples. Professor Pat Cain at Santa Clara Law School in California also published a blog post about this back in August. Links to both stories are provided at the end of this article.

One of the reasons given to lesbian couples for denial of the credit is that the birth mother did not give up parental rights as part of the adoption. As Professor Cain explains in both the Times article and in her blog, there is no legal standing for the IRS taking that position.

The second reason the IRS has been giving to some married same-sex couples (or same-sex couples in domestic partnerships) is that the credit is not available to married couples adopting each other’s children. At first glance, the IRS seems to be correct. The Internal Revenue Code does prohibit a taxpayer from claiming the credit for adopting their spouse’s children.

But the Defense of Marriage Act (DOMA) says, for all federal purposes, the term “spouse” can only mean a person of the opposite sex. Even in states where a same-sex couple is legally married under state law, DOMA says that couple is unmarried at the federal level and therefore are not considered “spouses.” Thus the adoption credit is  available to someone who wants to adopt children belonging to a same-sex spouse.

While this might seem counter-intuitive, this is the result DOMA gives when it comes to the adoption credit.

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