The IRS, in a surprising move, announces that it will begin recognizing the community property of California Registered Domestic Partners (“RDP”) for income tax purposes.
Taking effect on June 19th, 2010, each RDP may report fifty percent of their joint income on their individual tax returns. In addition, RDPs may also split deductions for community property as well as amend earlier tax returns as far back as 2007 to reflect these changes.
Beginning January 1st, 2011, many other changes will take effect including a new provision that states RDPs must “Income Split” community property, but still may not file married joint or separate federal income tax returns.
This astonishingly little-reported change in federal tax law could have major benefits as well as consequences for RDPs who have unequal incomes. While the scope and specific application of the new laws are not yet certain, it is possible these changes may also apply to California same-sex married couples.
The tax implications of this change are complex and will be of imminent importance to both California RDPs and same-sex married couples. Before filing your 2010 returns or amending returns for previous years, be sure to contact us and set up a free consultation to discuss how these changes will affect you and your loved ones! And be sure to check back frequently for new blog updates on this subject as well as many others on issues affecting the GLBT community.
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The Grain Law Firm specializes in estate planning, probate law and trust administration, with a special emphasis and experience within the planning issues surrounding the GLBT community. They have law offices in Beverly Hills and Pasadena, and offer planning services to all surrounding areas.
