Signal Tribune Newspaper

Earlier this month, California enacted SB1827, which requires registered domestic partners (RDPs) to file as married for the 2007 tax year.
Though the Federal law does not recognize domestic partnerships, this new tax law will dramatically change how RDPs file 2007’s and future tax returns. And while federal rules require filing returns using the single status when not legally married, California rules now require registered domestic partners to file returns using married status for California purposes only.
In response to the new requirement Long Beach Lesbian and Gay Pride, Inc. Administrative Director Carl Highshaw said, “While it is great that this new California tax law recognizes that the union between domestic partners should be treated as married, it unfortunately complicates our tax filing situations because the Federal law does not do the same. There are definitely pros and cons to all of this. The truth is, domestic partners will now need to seek a higher level of tax professional experience in order to help them navigate this new change.”
Filing separate returns for federal purposes and a joint return for California purposes is expected to be complex. Limitations that do not apply in separate federal returns can apply to a joint CA return. Items that may be limited when filing a joint return for CA are itemized deductions, dependent care assistance, investment interest, mortgage interest deductions, education loan interest and capital loss limitations.
The California RDP rules apply to taxpayers registered with the California Secretary of State. They can also be registered with another state that allows registration of domestic partners. Only registration with the state applies. If partners are registered at the city (as with San Francisco) or county level it does not count for the California filing status rules.
As of September 2007, the California Secretary of State office showed 43,790 couples registered as domestic partners. Being a registered domestic partner means the partners are permitted to make medical decisions for one another and hold title to property as community property.
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The above information was submitted by the Long Beach CPA firm of Onisko & Scholz, LLP. For additional information on SB1827 and other possible tax savings, call (562) 420-3100.