Legally-married same-sex couples enjoy the same tax benefits as traditional married couples, but only as they relate to the income tax levied by their states. Not so when it comes to federal income tax. However, in a bizarre twist of the tax code, that very exclusion may actually give them an advantage when it comes to the “second parent adoption credit.”
Second parent adoption credit twist
Nine states now legally sanction same sex marriages, and likely other states will follow in time. However, under the federal Defense of Marriage Act, or DOMA, marriage is recognized as only between a man and a woman. Therefore, in virtually every situation, gay married couples are denied the federal tax breaks available to heterosexual married couples.
The second parent adoption tax credit is perhaps the only provision in the tax code that actually works in the favor of same-sex couples under certain circumstances. And that advantage comes precisely because the federal government does not acknowledge their unions.
A heterosexual married couple can take the an adoption credit if they adopt a child together. However, if the one of the couple wants to adopt the child of his or her spouse, they are denied the second parent adoption credit. In the case of gay married couples, however, the federal government does not recognize their union. Therefore, the non-parent can take the tax credit when adopting the child of his or her spouse.
Gideon Alper, a Florida adoption attorney, told CNN, “Same-sex couples face a big disadvantage tax-wise through the rest of the system by not being married [at a federal level], so this is like a saving grace that lets them save a little money.”
The second parent adoption credit is designed to help pay for the multitude of fees associated with adoption. The credit will grant taxpayers up to $12,650 per child for “qualified adoption expenses.” It is a big help, but adoptions are not cheap. According to Alper, the legal and related fees can add up to as much as $5,000.
The future of DOMA?
The Supreme Court is expected to take a look at the constitutionality of the DOMA later this year. Should the top legal bench decide to overturn the law, married same-sex couples in some states may be allowed the same income tax breaks that other married couples enjoy now. However, they will likely also then be denied the second parent adoption credit.
I’m sure most same-sex couples would be happy to make that trade-off.