How to File Registered Domestic Partner Tax Returns

The concept for filing domestic partnership returns is simple:

  1. Add up your income, and report half on each partner’s return.
  2. Add up your deductions, and report half on each partner’s return.
  3. Create a table that shows the income, deduction, and each partner’s share.  For tax years 2012 and after, use IRS Form 8958.
  4. Print it all out and mail it in, or e-file if available.

The more complicated part is in the details, but here are a few ideas to keep in mind:

  • Keep in mind what is community property, and what is not and only split those items that are community under state law.  Refer to "Understanding Community Property" for a primer on what is considered “community”.
  • Track all the income, what is community and what is separate, in a spreadsheet for easy reference.  You would then enter the appropriate items on each line of the tax return, and then use this to complete the new IRS Form 8958, which breaks down the income and deductions, how it was split, along with totals. This form, 8958, will need to be included with the tax return.
  • For Schedule C income, it can be split at the Schedule C level, or the net income that pulls to 1040 line 12 can be split, and added to Line 21 as "Community Property Schedule C Allocation".  There is some debate on this method, as it impacts what is called Self Employment taxes.  In the past, we generally split the net income based on the spirit of how Self Employment taxes are supposed to work.  However, we may change if specific rulings are issued.
  • Remember that the amount you ADD to one spouse’s return should equal the amount you DEDUCT from the other.
  • Do the same with the deductions, and combine each category on Schedule A, if applicable.
  • You are able to split any taxes withheld, both federal and state, but NOT estimated tax payments.
  • With the new form 8958, you should be able to e-file, as we have for our clients for several years now.  If you are paper filing the returns, print them out, and write on the top of the return in RED “Filing Pursuant to CCA 201021050”. This will help the IRS know how to process it correctly.

Confused?

Many are, so you are not alone. If you decide you need more assistance, please see the Q&A on what to ask a tax professional, or contact us to help you move forward.