Tax Issues and the Non-Traditional Family

Tax Professionals' Resource
December 10, 2012 — 1,501 views  
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As tax season rolls around again, there are many issues that are left unresolved and uncertain in the tax code. Each year, alterations and additions to the code make it more difficult to understand exactly what is and is not allowed, even for tax professionals. For non-traditional family taxes, it can be even more daunting, as the issues are not spelled out clearly within the code.

Take a look at same-sex couples. If they are legally married in their state, they are allowed to file jointly, as a married couple. However, as long as DOMA, the Defense of Marriage Act, is on the books, which appears to include all of calendar year 2012, these same couples are not allowed to file jointly on their federal taxes.

In order to receive all of the benefits of being married, the couples must prepare their taxes twice; once jointly and once separately. This is further complicated in federal tax credits and deductions which might have limited state liabilities being reduced as well, leaving same-sex couples to overpay their taxes.

For families where a grandparent is raising a child, it can be equally tricky. If the grandparent does not have legal custody, they may not be able to take any tax deductions or credits for the care of the child. These benefits may go to the biological parents, even if they are not the primary care giver.

Benefits such as claiming the child as a dependent, head of household status, even the Earned Income Tax Credit or deductions for child care may be denied without proper legal backing and guardianship in place. For grandparents raising children, it might be a losing proposition financially. They experience all of the debts without any of the tax benefits.

With both of these types of families, the issue stems from an antiquated and complex tax code not designed to deal with the non-traditional families of today. States tax laws add to the complexity for same-sex couples and non-traditional families with children.

For the taxpayers in these arrangements, it can be a confusing and stressful time. Having to prepare the same taxes twice can be expensive for same-sex couples. It also leads to a higher rate of being audited by the Internal Revenue Service. Non-traditional families raised by grandparents also experience higher rates of IRS tax audits due to the complex nature of these tax preparation documents and arrangements.

Tax Professionals' Resource