Thom and I filed our taxes earlier this week, and a new twist is that the IRS now wants couples like us—registered domestic partners (RDPs) in community-property states—to split their income on their federal returns. This affects Washington, Nevada, and California. From Publication 555 (Rev. December 2010):
For 2010, a RDP in Nevada, Washington, or California (or a person in California who is married to a person of the same sex) generally must follow state community property laws and report half the combined community income of the individual and his or her RDP (or California same-sex spouse).
It’s great (and just) that the IRS recognizes state community-property rights (i.e., as with married couples, any earned income and deductions are considered to be held jointly), but by virtue of the Defense of Marriage Act (DOMA), which bars federal recognition of same-sex marriage, gay couples still have to file as single persons. That means unlike federally recognized married couples, we can’t file one joint federal return. (Well, in any case we’re not married in California by virtue of Prop 8, but that’s a whole ‘nother issue.) No, that would be too easy. We still have to file separate returns while evenly splitting our income and other community property, and taking into account any separate property (like inheritance, assets gained before the partnership, associated interest, etc.).
So we filed by mail and included a cover letter explaining our situation, just in case some IRS agents aren’t up to speed with the new rules, and a worksheet showing the allocation of our community vs. separate property. The bottom line is, due to our particular circumstances, we have a lower tax liability this year compared to last year under the completely single-person tax treatment, but it would be nice if we could file one federal return and not have to do the extra accounting.
California gives RDPs basically the same rights as married spouses, and for the last two years we’ve filed our state tax returns jointly (and electronically). Easy peasy. For this—not just convenience but more importantly, equality—and a whole lot of other reasons, DOMA has got to go.
» See also: Lambda Legal FAQ (PDF); New York Times Bucks blog entry, “Tax Season Gets Trickier for Some Gay Couples“.
2 replies on “Tax time: new federal rules for domestic partners”
Thanks again for your earlier advice. I filed our returns 2 days ago, including amended returns. It was a pain to do it all, but the new refunds will have made it worth it.
Sure thing! Glad it all worked out. Thom and I are not sure yet if we’re going to amend our previous returns, but in any case we became partners in 2009, so it would be just one tax year to amend.