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Same-Sex Marriage in California

Same-sex couples are cheering President Obama’s statement that he supports same-sex marriage.

In an interview with Martin Bashir on MSNBC, Chris Matthews called the announcement “earth shaking”.  It was certainly bold, especially considering the announcement came very soon after North Carolina passed a constitutional amendment banning gay marriage and civil unions.

Even in California, we have not fully endorsed gay marriage.  Proposition 8 proved that.  California started issuing same-sex marriage licenses June 16, 2008, and discontinued on November 5, 2008 with the passage of Proposition 8 (an amendment to the California Constitution that limited marriages to those between one man and one woman).

Though Proposition 8 has since been found unconstitutional, a series of stays have kept the ban in place.  Because of this, a same-sex couple’s only choice for a legal union in California is registering with the Secretary of State as a Registered Domestic Partnership (RDP).   California Civil Code Section 297 states that Registered Domestic Partners have the same rights, protections and benefits as are granted to spouses.  California also considers RDP partners to be married for tax purposes, requiring the couple to file their returns using the filing status Married (RDP) or Married (RDP) Filing Separately.

However, the Federal government has the Defense of Marriage Act (DOMA), which is a federal law that defines marriage as the legal union of one man and one woman.  This means that same-sex marriages are not recognized for federal purposes, including insurance benefits for government employees, Social Security survivor benefits, and the filing of joint tax returns.

If you are a California RDP who must file your California tax return as a married person, what happens for your federal return?  You are still “single”, and must file your federal tax return using that filing status.

The IRS further complicated this issue in 2010 with its Chief Counsel Advice 201021050 which requires RDP couples and same-sex married couples in community property states to split community income and deductions on their single federal returns (even though they are not considered married).  All income and deductions would be evenly split on the two federal returns, unless the partners execute an agreement opting out of community property treatment.  This means Partner A picks up half of Partner B’s W-2 earnings and withholdings on his/her federal return, and vice versa.

The rules governing the tax treatment of California RDP couples are complex, and the differing treatments by IRS and California increases the complexity level of these tax filings.

By | 2017-05-24T13:42:42+00:00 June 20th, 2012|Articles, Estate & Trusts|0 Comments

About the Author:

Lorraine (Lori) Shrout is an Enrolled Agent with extensive experience in tax compliance, consultation, and training. Lori has worked in large to mid-sized public accounting firms for over twenty years and enjoys helping clients better understand tax laws and recognize potential tax issues by identifying strategies to minimize the overall tax burden.

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