Glossary: DOMA

In most of my blog posts about same-sex marriage and taxes, I reference “DOMA.” What is DOMA?

DOMA stands for the “Defense of Marriage Act.”

The pertinent part of DOMA says (my emphasis added):

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.

For tax purposes, DOMA causes many problems for couples in same-sex marriages. To meet their federal tax obligations, couples in same-sex marriages must:

  1. Prepare and file their federal tax returns as two single people, using a filing status of either single or head of household, and applying tax law as it applies to unmarried people.
  2. Prepare (but not file) a “mock” federal tax return that shows what the couple’s federal taxes would have looked like if the government recognized their marriage. Couples must apply tax law as it applies to married people when preparing this mock return.
  3. Prepare and file their state return as a married couple, using the mock federal return as a reference.

The part about “applying tax law for unmarried people” vs. “applying tax law for married people” causes many tax problems. Consider all the places in the tax code where tax treatment of an item varies depending on marital status.

Couples in same-sex marriages also face taxation of health insurance benefits when they place their spouse on an insurance policy — something that opposite-sex couples don’t encounter.

The U.S. Supreme Court heard arguments relating to DOMA in March, and the Court is expected to issue a ruling within the next few weeks. If the Court overturns DOMA, couples in same-sex marriages will be treated the same as couples in opposite-sex marriages for all federal purposes.