Does domestic partnership affect your California taxes? Here are the pros and cons

From health insurance to income taxes to what happens if one partner dies, the benefits given to people in domestic partnerships are different from those who are married — and it depends not just on your state but sometimes your city too.

Let’s break it down.

What is a domestic partnership?

As defined by the U.S. Department of Health and Human Services, a domestic partnership refers to two unrelated people — of the same or opposite sex — who live together but aren’t married.

Domestic partnerships aren’t recognized at the federal level, but some states guarantee certain legal rights.

Tom Brougham, a gay rights activist, coined the term “domestic partnership” in 1979, according to the California Law Review, while urging his employer to provide healthcare coverage to his partner.

Domestic partnerships became less common after the Supreme Court ruling that legalized same-sex marriage in 2015, according to Cornell Law School’s Legal Information Institute.

What are the benefits in California?

California passed its domestic partnership statute in 1999, defining it as two adults who share their lives in “an intimate and committed relationship of mutual caring,” regardless of gender or sexual orientation.

These are the requirements, according to state law:

• Neither person is married or in another domestic partnership with someone else that hasn’t been dissolved or terminated.

• They aren’t blood related.

• They are at least 18, with some exceptions.

• Both people can consent to the partnership.

Domestic partners registered with the California city they live in don’t have the same rights provided by the state. The Declaration of Domestic Partnership form is available on the state’s website.

Generally, domestic partners in California have the same rights, protections, benefits and responsibilities as spouses. That means a surviving domestic partner gets the same benefits of a widow or widower. The same thing goes for former registered domestic partners.

But it’s not all the same — especially when it comes to tax season.

The IRS doesn’t recognize domestic partners or civil unions that aren’t marriages under state law. That means you can’t file a federal return saying you’re married filing separately or jointly.

Plus, if you’re hoping to give health benefits to a domestic partner through your job, you have to report that as taxable income to the IRS, according to the Society for HR Management — unless your partner qualifies as a dependent, Bankrate reported.

That’s because the federal government doesn’t recognize domestic partnerships. The benefits become imputed income, which is the cash value of benefits given to an employee. And that increases your taxable income.

On the state level, you may be able to deduct the value of that employer-provided insurance for domestic partners, according to the Franchise Tax Board and San Francisco Health Service System.

For specific tax questions, you should visit the IRS’s FAQ page or talk to a tax professional.

Since the federal government doesn’t recognize these partnerships, the Family Medical Leave Act doesn’t protect you if you take leave to care for a domestic partner. That said, because the California Family Rights Act does recognize domestic partnerships, you can use that for leave protection, according to the California Department of Human Resources.

Some couples in domestic partnerships could qualify for Social Security benefits as a spouse or living spouse if they meet certain criteria, according to the Social Security Administration.

How does California compare to other states?

Five states — Colorado, Hawaii, Illinois, Vermont and New Jersey — allow for civil unions, according to the National Conference of State Legislatures.

California, Maine, Nevada, Oregon, Washington, Wisconsin and the District of Columbia allow for domestic partnerships. In Hawaii, the state allows reciprocal beneficiaries.

Some cities allow partnerships in states without laws on the books. Phoenix, Arizona, for example, allows unmarried people to register for a domestic partnership, but only grants visiting rights to healthcare facilities in city limits.

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