California State Tax Information for Domestic Partners

There is great news for those who those domestic partners living in California. In 2008, registered domestic partners will be allowed the same rights and married couples under the eyes of the California State Tax Board. Through SB 1827, registered domestic partners will be allowed to file their California tax returns as either "married filing jointly" status or "married filing separate."

The California State Tax Board is the second state tax board to recognize homosexual couples or domestic partnership with the new filing status. Massachusetts is the first state to offer such a filing status.

Senator Carole Migden, Democrat for San Francisco, authored SB 1827. The new law takes effect for tax year 2007, which taxpayers will begin filing in January 2008, and does not impact federal tax law. I don't see why not, California has recognized domestic partnership since 2003. This new law will simply allow domestic partners to obtain the same tax bracket as married couples.

What are the benefits of SB 1827? Other than allowing partners to have the California tax filing of "married and filing jointly" and "married filing separate" there are several benefits of stepping into this type of tax bracket.

By filing jointly, California domestic partners can obtain a $6,820 standard deduction. Let's not forget that domestic partners under California tax laws can now file head of household, which is an added bonus of $120. Domestic partners under California tax laws can now obtain a larger refund for partners that have children in their household. Domestic partners in California will now receive $120 in Non-refundable renter's credit.

SB 1827 is not without problems. The California State Tax board believes that the new law will cost the state roughly ten million per year. The State Tax board will also have to program and test the automated system, which may cause slower return processing. The State Tax board will have to create new tax forms to include domestic partners. Tax practitioners will have to learn new tax laws.

What can domestic partners do to make the transition from single filing to married filing?

Talk to your tax advisor and start planning early. We all know that filing yearly taxes are a major headache with new tax laws and obtaining all the itemized deductions that we can.

Update your withholdings through your paycheck. It's important to be prepared for the new tax law to come into effect. In preparation for this new law, registered domestic partners may want to update withholdings or estimated tax payments for their 2007 tax return that will be filed in 2008. To adjust your withholding, go to www.ftb.ca.gov/individuals/wsc/adjst_wgs.html.

Talk to the pros about your tax questions. Taxpayers and interested parties can submit questions on this matter via the FTB's Website at www.ftb.ca.gov or by emailing RDP@ftb.ca.gov.

Take the self-tests provided by the State Tax Board. The filing requirement self test will answer some simple questions about filing. The self test will also give you answers about dependants. That self test can be found at http://www.ftb.ca.gov/individuals/FileRtn/index.html

Take the Head of household self test. The Head of Household self test will answer questions such as filing requirements, reasons you may not qualify, what qualifies a child and what qualifies a parent, frequently asked questions and more.

Read through the F.A.Q if you have questions. The State Tax Board FAQ will help answer questions about filing requirements, new deductions and much more.

Keep your paperwork in order. There are nearly 60 tax deductions that an individual or family can make. You can find out which deductions you will be qualified for at http://www.ftb.ca.gov/forms/06_forms/06_540credit.pdf. The best thing to do is purchase a small filing system for under twenty dollars and organize your paperwork by deduction.