FIVE THINGS YOU MUST KNOW ABOUT DOMESTIC PARTNERSHIPS

Are you considering registering as Domestic Partners? If you are, it’s important that you know that there are several legal implications that come along with your new status, including how you file your tax returns.

1. Both parties need to fill out the Declaration of Domestic Partnership, available at http://www.sos.ca.gov/dpregistry/dp_formsfees.htm. In order to qualify as Domestic Partners, the couple needs either to be of the same sex, or opposite sex couples must include at least one person who is over 62 and meets the eligibility requirements of the Social Security Act. For more details, check out the Declaration of Domestic Partnership form.
    
2. Once you’re officially an RDP, you must file your tax returns in California as Married/RDP Filing jointly, Married/RDP filing separate, or if requirements are met, Head of Household. For Federal purposes, RDP’s must file as single of Head of Household if requirements are met.
    
3. And, since you and your domestic partner will be filing different returns between the IRS and the State of California, you may face additional time and expense as a result. Also, when combining tax returns for an RDP in California, certain items (e.g., capital losses, Section 179 expense deduction) may be limited.
    
4. The termination of an RDP is similar to a divorce should you need to end the partnership. Once the RDP is registered, the ability to file as a single person in California no longer exists. The RDP is not terminated until the court issues a final decree, and if support is awarded, it may be taxable income to one party and a deduction to the other.
    
5. The bottom line is that declaring your relationship as an RDP has real legal ramifications and demands serious investigation. We strongly suggest that those considering an RDP contact the experts at Gregory Barton, CPA and Associates, who will provide you with the professional tax guidance and legal assistance you deserve before registering with the Secretary of State. You can reach the firm at 760.969.6499 or Email GregBartonCPA.com. Check out our website at: www.GregBartonCPA.com.