Income Tax Changes for California Same-Sex Married Couples and Registered Domestic Partners

In May, 2010, the IRS changed the rules for how California registered domestic partners and same-sex married couples should file their federal income taxes. Under the new rules, the income of each partner or spouse is considered community property (which is the correct characterization under State law), and one-half of the total earnings of the couple must be reported on each return. The only exception would be if the couple entered into a legally enforceable agreement prior to registration or marriage which keeps the income of each party separate, and therefore no community property is created.

Such couples must continue to file separate returns. This can create many problems for tax preparers and filers.

If you are a registered domestic partner, or a spouse in a same-sex marriage, and are using a tax preparer to assist you with your 2010 taxes, be sure he or she is familiar with the new rules and has communicated with other preparers who are assisting similar taxpayers so that he or she is well educated about this new rule change.

While this change may be confusing at first, it may result in substantial tax savings for many couples. Couples may also amend past returns if it would be favorable to them.

California tax rules have long required same-sex married couples and registered domestic partners to file joint returns, and they should continue to do so.

Note: If you registered as domestic partners solely with a local municipality or a county, but not with the State of California, and are not married under the laws of the State of California, these new rules do not apply.