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Currently, the Federal government won’t allow gay and lesbian couples to marry, but same-sex registered domestic partners are required to file taxes as if they were, one of the little-known recent changes to IRS tax codes that have left many in a state of confusion.
"There are an estimated 350,000 gay and lesbian couples affected by these changes, but often even the IRS isn’t clear on its own rules, and that has created chaotic situations for many same-sex couples," says Certified Public Accountant Elisha Wiesenberg, an L.A.-based tax preparer who specializes in tax issues regarding same-sex couples.
Here are Wiesenberg's top five tax tips for non-married, gay and/or lesbian couples who are registered domestic partners (RDPs):
1) Consult with a qualified tax adviser
Wiesenberg notes that at-home software programs work well for simple tax solutions, but RDPs have much more complicated returns and it is best to seek out professional help.
"The new Federal guidelines obligate RDPs and same-sex married couples to combine their income and split it, and at-home tax software just isn’t capable of handling these situations," he said.
2) Understand your partner’s financial situation
If you don’t already have a clear grasp of both partners’ financial situation, now is the time to have those conversations. Understand income and debt obligations.
"If you don’t already know everything there is to know about your partner’s finances, by the end of April, you will," Wiesenberg says.
3) Put your financial documents together
Even if you keep separate financial records, from a tax standpoint, you are seen as a couple – so compile your documents as such, making sure to keep individual items in order, but have them ready to be combined.
4) File powers of attorney and tax authorizations
It is important that you have already filled out and submitted both IRS Form 8821 and IRS Form 2848 prior to seeing a tax preparer.
"You may need to discuss each others’ taxes with the IRS, but even though you’re filing as a couple, the Federal government and IRS don’t permit you to talk about each others’ taxes or make decisions without the proper forms," Wiesenberg said.
5) Get ready to take notes
Both spouses should be prepared to keep detailed records of their conversations, whether with a tax adviser or, especially when communicating with the IRS.
Wiesenberg has found that his clients are often frustrated by the system in place for registered domestic partners and same-sex married couples, but advises that patience can pay off.
"New Federal guidelines obligate RDPs and same-sex married couples to combine their income and split it," he said. "On the whole, it’s a more favorable way to file, so it’s tempting to think of this as a little bit of compensation for the complexity involved in preparing returns."
Elisha Wiesenberg of Wiesenberg & Company specializes in tax issues regarding same-sex couples. For other articles or more information about the tax code and how it applies to same-sex couples, or to schedule an appointment with Wiesenberg, himself, visit his website at CPA Firm LA.