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Tax News
New Federal Tax Treatment of Community Property for Registered Domestic Partners and Same-Sex Marriages

The federal tax treatment of the community income of California registered domestic partners (RDP) and same-sex married couples (SSMC) has changed. These couples are now required to each report one-half of community property income on their separate federal tax returns.

RDPs and SSMCs must report whether earned income, deductions, payments, and credits are community or separate property and report. The same rules used by California opposite-sex married couples when filing California separate returns are followed for determining RDP and SSMC community and separate income.

Example: In the current year, RDPs Chris and Pat are residents of and domiciled in California. Chris earns $15,000 in wages and Pat earns $30,000. In addition to wages, Pat inherited stock and receives $5,000 in dividends. The stock is in Pat’s name only, and the stock and dividend income is kept separate from community funds.

  California Joint Return Federal Separate Returns
Chris Pat
Chris      
Wages $15,000  $7,500 $7,500
Pat
     
Wages
Dividends
$30,000
5,000
$15,000
-0-
$15,000
5,000
Total $50,000 $22,500 $27,500

General rules for determining community and separate income, including an allocation worksheet are provided in IRS Publication 555, Community Property.

Guidance for how to file joint or separate returns is provided in FTB Publication 737, Tax Information for Registered Domestic Partners, and in FTB Publication 776, Tax Information for Same-sex Married Couples.

For more information, go to irs.gov and ftb.ca.gov.

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