Tax Points for California Registered Domestic Partnerships

Domestic partnerships were our topic last week. We are going to continue on that topic this week to help our readers in California to get a better understanding about domestic partnerships. One topic that some people in a domestic partnership are curious about is how the partnership affects taxes.

When it comes to the state tax system, registered domestic partnerships are afforded the same rights as married couples. This means that for state purposes, people in these partnerships will file joint tax returns or married filing separately returns. Only people who have registered a domestic partnership are required to do this. Same-sex couples and opposite-sex couples who haven’t registered with the state don’t fall under this requirement.

Even if the domestic partners would file a federal tax return as a single person, they would still file the state return as a married couple. This is only valid for tax year 2007 and beyond. Tax year 2006 and those prior don’t fall under this provision.

The rules about registered domestic partnerships continue even deeper in the tax code. These couples treat real property as marital property for the purpose of state taxes. This includes them being viewed as married couples for the mortgage interest rules for the state. It also includes the capital gain exclusion rules if the couple qualifies for those exclusions.

Registering a domestic partnership in California is a serious matter. Understanding exactly what it entails is vital. Whether you are considering a domestic partnership or have already entered into one, you should get all questions answered as quickly as possible to ensure you are meeting your responsibilities and protecting your rights.

Source: State of California Franchise Tax Board, “What if I’m a domestic partner?” Dec. 22, 2014