Chat with an FTB Representative

What if I'm a domestic partner?

Domestic Partners

California Family Code section 297 provides that "domestic partners are two adults who have chosen to share one another's lives in an intimate and committed relationship of mutual caring."

A domestic partnership is established in California when both persons file a Declaration of Domestic Partnership with the Secretary of State, and at the time of filing, all of the following requirements are met:

  • Both persons have a common residence.
  • Neither person is married to someone else or is a member of another domestic partnership with someone else that has not been terminated, dissolved, or adjudged a nullity.
  • The two persons are not related by blood in a way that would prevent them from being married to each other in this State.
  • Both persons are at least 18 years of age.
  • Either of the following:
    • Both persons are members of the same sex.
    • One or both of the persons is/are over the age of 62 and meet the eligibility criteria under Title II of the Social Security Act as defined in 42 U.S.C. Section 402(a) for old-age insurance benefits or Title XVI of the Social Security Act as defined in 42 U.S.C. Section 1381 for aged individuals.
  • Both persons are capable of consenting to the domestic partnership.

The definition of "common residence" means that both domestic partners share the same residence. It is not necessary that the legal right to possess the common residence be in both of their names. Two people have a common residence even if one or both have additional residences. Domestic partners do not cease to have a common residence if one leaves the common residence but intends to return.

How do I become a registered domestic partner (RDP) in California?

Information on how to file a Declaration of Domestic Partnership can be obtained at the Secretary Of State's Website www.sos.ca.gov.

California Taxation of Domestic Partners - General Principles.

In general, California now affords the same rights and responsibilities to RDPs that previously were available only to married individuals. For California tax purposes, the same rules applicable to married individuals (relating to filing status, community property income, etc.) now apply to RDPs. However, because the federal government does not recognize domestic partners as married individuals for federal tax (IRS) purposes, RDPs will continue to file as unmarried individuals on their federal returns.

Can I file a joint California return with my domestic partner for tax years prior to 2007?

No. Domestic partners cannot file a married filing joint or married filing separate return for tax years prior to 2007. A domestic partner is required to use the same filing status for state income tax purposes that was used or would have been used for federal income tax purposes. For tax years beginning on or after January 1, 2007, domestic partners are required to use the same filing status as married couples.

Is the earned income of domestic partners treated as community property for tax years prior to 2007?

No. Earned income is not treated as community property for state income tax purposes for tax years prior to 2007.

Are all domestic partners required to file joint or married filing separate returns under the new law?

No, only domestic partners who are registered with the California Secretary of State are required to file using the married filing joint or married filing separate filing status. More information on unions entered into from other states will be provided on this Website in the near future.

When will registered domestic partners (RDPs) use the same filing status rules as married individuals when filing California returns?

The new law applies for RDPs filing their 2007 tax returns in 2008.

Can RDPs file a California tax return with the same filing status as they use on their federal return?

No, the new law requires RDPs to file a joint return using the married filing joint or married filing separate filing status. Federal law does not allow RDPs to file a joint return.

If an RDP decides to file a California married filing separate return, are there any special rules for completing the return?

Yes, as is the case with all taxpayers eligible to use the married filing joint status, RDPs that choose to file a return using the married filing separate filing status should see FTB Publication 1051A, Guidelines for Married Filing Separate Returns.

Do RDPs combine the number of exemptions they claim on their separate federal returns to arrive at the total number of exemptions they claim on their California return?

Yes, all personal, blind, senior, and dependent exemptions should be combined on the married filing joint California return. For a detailed explanation of exemptions see Form 540A instructions.

Can an RDP who lives with their partner and files head of household (HOH) for federal purposes use the HOH filing status for state purposes as well?

If your RDP lived with you and your child, stepchild, adopted child, or eligible foster child, at any time during the last 6 months of the year, you do not qualify to use the HOH filing status for California purposes.

Can an RDP file as head of household (HOH) on a California return?

Yes, RDPs can file HOH on a California return if they maintain the main home for their child, stepchild, adopted child, or eligible foster child and are “considered not in a registered domestic partnership.”"

To be “considered not in a registered domestic partnership” you must meet all of the following requirements:

  • Your RDP did not live in your home during the last six months of the tax year.
  • You file a separate return.
  • You pay more than half the cost of keeping up your home for the tax year.
  • Your home was the main home of your child, stepchild, or eligible foster child for more than half the year.
  • You must be able to claim an exemption for the child.

For details on filing HOH see FTB Publication 1540, California Head of Household Filing Status.

Does an RDP need to terminate the domestic partnership to qualify for HOH?

No, since a married individual can qualify for HOH without terminating the marriage (divorce) an RDP can qualify for HOH without terminating the domestic partnership. In both situations the parties would have to be “considered not in a registered domestic partnership.”

If one RDP dies, can the surviving RDP file a joint return?

Yes, if an RDP dies, the surviving RDP can file as married filing joint for the year the RDP dies if he or she does not enter into a new registered domestic partnership or marriage. If an RDP dies in the following year prior to filing their return the surviving RDP can file a married filing joint return. For more information on surviving RDPs see deceased taxpayer.

How do RDPs who file a California joint return combine their incomes, deductions, credits, etc., from their separate federal returns to complete their California return?

RDPs will combine income and deductions from their separate federal returns to complete their California tax return and compute their tax. Draft instructions for RDPs will be available on our Website in June 2007.

How do RDPs who file a California joint return treat itemized deductions that are subject to AGI limitations?

Under current law RDPs combine their federal AGIs to determine limitations of credits and deductions that apply to their California return. FTB is exploring alternatives to the current law for AGI. For details of the alternatives being considered, see FTB's AGI Limitation Discussion paper.

Can FTB waive accuracy-related penalties for RDPs due to reasonable cause?

Yes, but there are no special rules to grant waiver of penalties for RDPs. "Reasonable cause" is a standard exception to most penalties imposed under the Revenue and Taxation Code and the Internal Revenue Code. Generally, reasonable cause exists where the failure to comply occurs despite the exercise of ordinary business care and prudence.

Will FTB impose a penalty for underpayment of estimated tax for RDPs who filed a joint 2007 tax return?

No, unless the exceptions that normally apply are not available. See estimated tax penalty exceptions.

Will RDPs need to update their Form DE-4, Employees Withholding Allowance Certificate?

Although revising the Form DE-4 is not required, RDPs may want to update their California filing status withholding allowances on Form DE-4 to avoid over or under withholding of California income taxes. Under withholding of taxes may result in penalties.

How should RDPs report on their married filing separate returns items such as community income, community deductions, and separate expenses paid with community property funds?

An RDP will use the same community property rules that apply to married individuals filing a separate return. RDPs may want to use a worksheet to record the division of community property shown on each return.

Do RDPs combine their federal itemized deductions that are not subject to limitations to arrive at their California itemized deductions before California adjustments?

Yes, to arrive at California itemized deductions RDPs filing a joint return would combine their federal itemized deductions that are not subject to limitations.

Have the mortgage interest rules for RDPs filing California returns changed?

Yes, now that the RDPs are treated as married individuals for California purposes the limitations applicable on a federal return for married individuals will limit your mortgage interest deduction on your California return. For more information about those limits see federal Publication 936, Home Mortgage Interest Deduction.

How does SB 1827 impact sales of CA real property?

Beginning January 1, 2007, RDP's who sell or transfer jointly owned CA real property that will be reported on their 2007 or later tax return shall be treated as spouses for purposes of completing Form 593-B Real Estate Withholding Tax Statement. Therefore, Real Estate Escrow Persons may complete and provide RDP's with a combined Form 593-B listing both partners for the completed real estate transaction.

Can an RDP who files a California married filing joint return exclude up to $500,000 of capital gain on the sale of a principal residence?

Yes, if they meet the capital gain exclusion rules that apply to a married individual filing a joint return. For more information, see federal Publication 523, Selling Your Home.

Can an RDP who filed a joint return apply for relief under California's innocent spouse provisions?

Yes, California innocent spouse provisions apply to anyone who files a married filing joint return.

If a court orders termination of a registered domestic partnership and a California Family Law Court awards spousal support (alimony), what is the tax treatment of these payments?

If the payment satisfies the requirements under tax law for alimony, it would be deducted by the payor and included by the payee. However, federal treatment of these payments is uncertain.

If a court orders a termination of a registered domestic partnership and a California Family Law Court orders a division of mutually acquired property (acquired with separate and/or community funds), what are the tax considerations for a gift, sale, part gift, or part sale? Could anything qualify for IRC Section 1041 or R&TC Section 18031 treatment?

If the property transfer satisfies the requirements under California tax law, the treatment is the same as for a property transfer by a married individual. Federal treatment of these transactions is uncertain.

What California tax benefits are available for a registered domestic partner?

Effective January 1, 2002, several taxpayer benefits were extended to a taxpayer's domestic partner and the domestic partner's dependent(s) for medical expenses and health insurance benefits that occur on or after January 1, 2002. The benefits provided by Revenue and Taxation Code section 17021.7 include:

  • An exclusion from gross income for employer-provided accident and health insurance.
  • An exclusion from gross income for medical expense reimbursement if the expense was not previously deducted.
  • Medical expenses deductible as an itemized deduction.
  • Long-term health care insurance deductible as a medical expense.
  • A deduction by self-employed individuals for health insurance costs. The deduction may not exceed the net earnings from the trade or business in which the insurance plan is established.

Federal tax law does not allow the same benefits for domestic partners. These deductions are taken as an adjustment on the Schedule CA(540) or Schedule CA(540NR).

California Adjustments
Type of Benefit Federal Treatment California Treatment Adjustment
Accidental and Health insurance exclusion of income Federal law does not allow an exclusion for accidental and health insurance paid by the employer for a registered domestic partner and the partner's dependents.

Internal Revenue Code §106(a)

For taxable years on or after January 1, 2002, California allows an exclusion from gross income for employer-provided accident and health insurance for registered domestic partners and their partner's dependents if not previously deducted.

California R&TC §17021.7

Enter adjustment on Schedule CA (540 or 540NR), line 7, column B the amount included in federal income.
Medical expense reimbursement as an exclusion from income Federal law does not allow an exclusion for medical expense reimbursement paid by the employer for a registered domestic partner and the partner's dependents.

Internal Revenue Code §105(b)

For taxable years on or after January 1, 2002, California allows an exclusion from gross income for employer-provided medical expense reimbursement for registered domestic partners and their partner's dependents if expenses were not previously deducted.

California R&TC §17021.7

Enter adjustment on Schedule CA (540 or 540NR), line 7, column B the amount included in federal income.
Medical expenses Federal law does not allow a deduction for medical expenses incurred for a registered domestic partner and the partner's dependents.

Internal Revenue Code §213(a)

For taxable years on or after January 1, 2002, California allows a deduction for medical expenses for their registered domestic partner and the partner's dependents as an itemized deduction that exceed 7.5% of Federal AGI.

California R&TC §17021.7

Enter adjustment on Schedule CA (540 or 540NR), Adjustments to Federal Itemized Deductions, under the line for Other adjustments. Enter the allowed amount as a positive number.
Qualified Long-term health care insurance deductible as a medical expense Federal law does not allow a deduction for long-term health care insurance expenses paid for a registered domestic partner and the partner's dependents.

Internal Revenue Code §213(a)

For taxable years on or after January 1, 2002, California allows a deduction for medical expenses for their registered domestic partner and the partner's dependents as an itemized deduction that exceed 7.5% of Federal AGI. Refer to Federal Publication 502, Medical and Dental Expenses, for additional limits on deductible long-term care premiums.

California R&TC §17021.7

Enter adjustment on Schedule CA (540 or 540NR), Adjustments to Federal Itemized Deductions, under the line for Other adjustments. Enter the allowed amount as a positive number.
Self-employed individual health insurance deduction Federal law does not allow a deduction for self-employed health insurance expenses incurred for a registered domestic partner and the partner's dependents.

Internal Revenue Code §162(l)

Self-employed individuals may claim a deduction for health insurance costs paid for themselves, their spouses, and dependents. For taxable years on or after January 1, 2002, self-employed individuals may also claim this deduction for health insurance costs paid for their registered domestic partner and the domestic partner's dependents.

California R&TC §17021.7

Enter adjustment on Schedule CA, column C, under the line for Self-employed health insurance deduction, the amount paid for health insurance coverage (established under your business) for your registered domestic partner and their dependents. Your total California deduction cannot exceed the limitations explained in the federal instructions. Do not include health insurance costs for any month you were eligible to participate in any subsidized health plan maintained by your or your domestic partner's employer.

Enter adjustment on Schedule CA, column B, under the line for Self-employed health insurance deduction, the amount of health insurance cost included in column A, for any month you were eligible to participate in any subsidized health plan maintained by your registered domestic partner's employer.

If a registered domestic partnership was terminated before the end of the 2007 taxable year, will a former registered domestic partner (RDP) be liable for outstanding tax liabilities that the other former partner has with the Franchise Tax Board?

Under California tax law, the Franchise Tax Board cannot hold the former RDP personally liable for the tax liability of the other former RDP. The same rules apply in this situation as apply to a previously married person filing a single return. When a single return is filed, the individual filer is responsible only for his or her own tax liabilities and penalties

If an RDP files a separate return and failed to include an item of community income on the return which should have been included, are there any circumstances under which relief may be allowed if an assessment of tax is issued based on the failure to report that income on the separate return?

Similar to the treatment of community property issues for married couples, if the RDP establishes that he or she did not know or have reason to know of the unreported item of community property, and it would be inequitable to include that item in the RDP's gross income, then relief from tax liability for that item may be available under California law.

If a court with jurisdiction of a dissolution proceeding for a registered domestic partnership assigns a tax debt owing to the FTB to one of the partners, is the FTB bound by the court order?

The parties to a dissolution can stipulate to any payment arrangement of taxes that they wish, and the court could order one party to satisfy outstanding tax liabilities. However, the FTB is not generally bound by such a court order. There are some circumstances where the FTB will follow a court order revising tax liability between the parties to a dissolution proceeding. See FTB Form 705.