Here in California, the State granted Registered Domestic Partners (RDPs) the same legal status and rights as married couples. For tax purposes, this change forced RDPs to file income tax returns as either married jointly or married filing separately. Anyone who is a RDP must use the married rates on their California state tax return. However since the Federal government does not recognize such unions, for Federal tax purposes RDPs must use the Single (or Head of Household if there is a qualifying dependant) filing status. This causes no small amount of hassle if you are preparing a tax return that is joint with someone for state but single for Federal….
Further, since California is a community property state all items that are considered community income and deductions must be allocated equally between spouses or RDPs if they file separate returns.
What this means is that for Federal tax filing purposes RDPs who live in California will generally claim half of each other’s community income and deductions on each of their Federal tax returns, but instead of using Married Separate rates like married couples would, they will be entitled to use the Single rates. This may well result in a big Federal tax savings for RDPs that is not available to married couples.
Just for laughs I decided to calculate how much tax my wife and I would save if we were able to claim Single (and Head of Household) status on separate returns as RDPs will now be able to do. To my surprise it was over $1,000.
Apparently, antidiscrimination can be ugly too