Major Changes to Federal Tax Law Impacts LGBT Taxpayers
On May 28, 2010 the Internal Revenue Service (IRS) issued a Chief Counsel Advisory (CCA 201021050) that recognizes community property rights for California registered domestic partners.
This Advisory instructs California Registered Domestic Partners that each partner “must report one-half of the community income, whether received in the form of compensation for personal services or income from property, on his or her federal income tax return”.
These changes apply to all tax years beginning after December 31, 2006 and are mandatory for tax years beginning on or after June 1, 2010. A taxpayer may amend their prior year returns for 2007, 2008, and 2009 if desired, but are not required to do so. Therefore, if you would pay less federal income tax under the new community property splitting rules then you have the option of amending prior year returns.
Although not addressed by the IRS Chief Counsel, the same reasoning as applied to California Registered Domestic Partners should apply to same-sex couples that are legally married in California.