California Same-Sex Couples Get Unintended Tax Break

11:22 am Uncategorized

GayMarriage 150x123 California Same Sex Couples Get Unintended Tax BreakThe Wall Street Journal reports that same-sex couples in three states – California, Nevada and Washington – will receive federal tax breaks this year due to unintended consequences from a conflict in state and federal laws.

In California, Nevada and Washington — which recognize domestic partnerships – registered domestic partners are subject to community property laws.  Because the IRS must follow state property laws, it has determined that registered domestic partners should calculate their total community income and split it down the middle for tax reporting purposes.

However, the federal Defense of Marriage Act (DOMA) prevents the IRS from treated domestic partners as married joint filers.  So each partner files as head of household while claiming half the community income…a move that can save domestic partnership households thousands in taxes, especially those with widely disparate income between partners.

Let our Costa Mesa law offices help you get started by contacting us today.

 

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