Tax Brake with Robert G. Nath, Esq.

As most people know, your filing status depends in part on whether you were “married” as of the close of the tax year. The determination of marital status is not federally controlled; the tax code looks to state (or local) law. For example, if you are legally separated from your spouse under a state or local decree of divorce or separate maintenance, you are not “married” for federal tax purposes. Some people obtain divorces once a year for tax purposes, but the cases interpreting this device strike it down as a sham.

The divorce decree must be final to be effective. “Interlocutory” (interim) decrees don't do the job. And, simply because a couple lives apart, they are still “married” in the IRS' eyes unless they have a court order described above.

What about “domestic partners.” So far, the tax laws are unfavorable to them. Several rulings have held that a domestic partnership is not a marriage for tax code purposes, even if it constitutes an “economic partnership.” That rule may change with time. If, for example, a state law is passed that declares domestic partners can “marry” in the same sense as others, it will be argued that this is a “marriage” under state law and therefore under tax law.

How about annulled marriages? The rule is that an annulment means the couple was never married. Therefore, if they filed married in Year 1 but the marriage was legally annulled in Year 2, they must file unmarried in Year 2 and amend Year 1's return.

How about “married” couples where one spouse refuses to sign a joint return, and/or is unavailable, unreachable, etc.? In that situation, the other spouse cannot obtain consent so he or she has no choice but to file married filing separately (or single under some circumstances). All in all, marriage can be complex enough without the tax laws making these types of distinctions. But what Congress passes, Congress can unpass. Right now Congress is considering major changes the IRS and Treasury have proposed to reform this entire area.