Unfortunately, the current state of the law creates two classes of married citizens. Traditional opposite sex marriages are one class and same sex marriages are treated as second class by the limitations created by DOMA (the poorly named "Defense of Marriage Act"). DOMA prohibits the federal government from recognizing same-sex marriages. Although the current federal administration has indicated they will not defend DOMA in Court, it is still currently the law of the land. That means that many of the tax issues described in our last few blog posts do not apply in the same way to same-sex marriages.

Issue #6. SAME SEX MARRIAGES: Below we have described the numerous ways that DOMA changes how same-sex marriages are treated when it comes to taxes:

MARTIAL STATUS: For Federal tax returns, same sex married couples cannot file under married status. Therefore, their tax status upon divorce does not change on their federal returns.

ALIMONY: Because same-sex former spouses cannot be considered spouses for federal tax returns, they cannot take a tax benefit associated with a former spouse. Therefore, alimony payments made to a same-sex former spouse do not qualify as tax deductible income to the payor and cannot be categorized as alimony payments for federal tax purposes.

PROPERTY TRANSFERS: Because same-sex spouses and former spouses cannot be considered spouses for federal tax purposes, the exemption on capital gain realizations for transfers between spouses does not apply. Similarly, the transfers of retirement accounts allowed by QDRO between former spouses is not permitted between same-sex spouses. The inability to transfer retirement assets without tax implications can severely inhibit the ability to divide marital assets sensibly.

These limitations imposed by DOMA create extra considerations that must be made in dealing with same-sex divorce cases.

Click here to read Divorce and Taxes: Issue #1. Marital Status.

There are two certainties in life: Death and Taxes. We've already written about how divorce and estate planning are interrelated, but what about divorce and taxes?

In all cases a divorce will affect some part of your tax return. In most cases there will be numerous changes in your income tax liability after your divorce and you should give consideration to what changes will take place because this could be a factor in determining the best divorce settlement for you. In some cases these changes may be complicated enough that your attorney should involve an accountant or certified financial planner to help analyze the different options. Our next five blog posts will explore the various issues raised by the interrelation of divorce and taxes so that you are at least aware of the issues to be on the lookout for.

Issue #1. MARITAL STATUS: The most obvious way that a divorce will affect your taxes is by changing your marital status. This is a change to your federal income tax return that will happen after every divorce case.

In Massachusetts, after the expiration of the Divorce Nisi waiting period (90 days from the issuance of the Judgment of Divorce Nisi) when the Judgment of Divorce becomes final you are officially divorced and you are no longer qualified to file a tax return as "married, filing jointly" or "married, filing separately". The key date for determining your tax year marital status is December 31. If your divorce nisi period crosses December 31, then you are technically still married in that tax year and must still file under a married status.

Obviously, marital status has a significant affect on your income tax liability and if you are scheduling an uncontested divorce hearing in the Fall you might want to consider whether it makes sense to schedule it early enough to change your status by December 31, or wait.

Click here to read Divorce & Taxes - Issue #2. Child Support v. Alimony.