Paul L. Caron

Friday, April 3, 2009

Tax Implications of Today's Iowa Decision Outlawing Gay Marriage Ban

Iowa CPA Joe Kristan blogs the tax implications of today's unanimous decision of the Iowa Supreme Court outlawing the ban of gay marriages (Varnum v. Brien, No. 07-1499 (iowa Apr. 3, 2009)):

Most same-sex couples will not see a difference in their Iowa taxes as a result of today's Supreme Court ruling allowing them to wed in Iowa. The Iowa tax system allows married couples to file "separately on a combined return," giving them each a run up the brackets. Most married couples file this way; only couples with a single earner and very little joint investment property normally file an Iowa return with "joint" status.

In certain situations, though, it can make a big difference.

  • Capital Losses
  • Passive Losses
  • Iowa Capital Gains Deduction
  • Pension Exclusion
  • Inheritance Tax

In general, marriage is a tax advantage when one spouse has tax breaks that the other spouse can use that would otherwise be deferred or lost. Other examples could include excess tax credits and net operating losses.

Federal tax filings are unaffected for now by the decision, as the Defense of Marriage Act prohibits joint filings by single-sex couples. As filing status is determined at the end of the tax year, the Department of Revenue will need to come up with rules dealing with the differences between federal and Iowa rules this year sometime.

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Iowa Supreme Court said gay-YES!
See the actual video.

Posted by: Drewing | Apr 3, 2009 12:02:59 PM