Tax Filings When Married But Not Registered
The California State Legislature as of 2007, enacted laws to treat California State Registered Domestic Partners (RDP’s) as married persons are under the tax code of California. The California Franchise Tax Board recognized the complexity of treating couples as married under state law, yet as individuals who are not related under federal law, and literally analyzed all the different tax provisions to provide equality to California State Registered Domestic Partners and enacted guidelines as of December 2007 to guide state filings.
Since June 17, 2008, there were over 18,000 same gender marriages and many of these couples are already Registered Domestic Partners and will continue to file their California State Income Taxes as they did in 2007. However, there are also many couples who are now married and may not be registered with the State as Domestic Partners. Because of the passage of Proposition 8, and the intervening court case in which the California Supreme Court will rule on the validity of a ballot initiative which purportedly stripped a class of citizens of the fundamental right to marry, there is uncertainty as to how same gender married couples who are not registered as domestic partners should file California State Income Taxes for 2008. Even though oral arguments have been scheduled for March 5th, a court decision is not expected until late May or early June of 2009, yet the filing deadline of April 15 remains intact.
The rule for determining filing status is determined by one’s marital/ RDP status as of December 31 of any given year. So those who are married or RDP’s as of December 31, file as such and those who are legally divorced or single file as such. Given that many couples were married under state sanctioned law in 2008, there is good argument to support filing as married in California State, because as of now, those persons are still married. The Franchise Tax Board has yet to issue any directive regarding these couples however; there appear to be two options. One is to file the federal return and go on extension with the California State return, which is a lot of added work for the preparer and the filer. The other is to file federal returns and file the CA state return as married (filing separately or jointly) which reflects the current status of these couples until the court issues a decision.
Although there are no published guidelines at this time, there is consensus among tax practitioners at this time to file as married under state law or to do both calculations (as related and not related but to actually disclose marital status on the return) and to pay the higher of the two calculations (which will depend upon a family’s particular income and deduction scenario). This would avoid potential penalties and interest and avoid any future argument that a family did not disclose their marital status should the Court overturn Proposition 8. In any case, one should consult with their tax practitioner in advance of filing.
Deb L. Kinney