- quote -

Nan-
The domestic partner health insurance case you asked about
was an easy one. California's AB205 becomes effective
January 1 and gives domestic partners most of the same
rights and responsibilities of married couples, including
community property, divorces, etc. I went to a workshop last
week with a tax attorney who specializes in domestic partner
tax law. She had more questions than answers for us and the
scenarios are mind-boggling. For example, those who are
already registered as domestic partners need to decide
whether to rescind their registration and then re-register
because, as of January 1, everything (including community
property laws) is retroactive to when they originally
registered.

To avoid possible incorrect filing of California returns or
giving wrong advice regarding property ownership, any
California preparer who works with any domestic partners
MUST get up to speed (as much as we're able to at this
point) on dealing with domestic partner tax law.

Jan Zobel EA
Oakland and San Francisco, CA

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Thank you all. I really need to bone up on the differences
for domestic partners. Seems that the older one gets, the
more new things happen.....(I think I'm grinning? or maybe
groaning?)

Nan, EA in LA
Entrenched belief is never altered by the facts.....

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- quote -

I suspect this will be $3700 in taxable income, which is not
the same as saying it will cost her $3700 a year. That's
the way it has worked for me for several years.

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Most domestic partner benefits are taxable. Still your
paying only a fraction of their cost.

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naneklund[at]aol.com (Nan Eklund) writes:

- quote -

I'm not sure what "new law" you're talking about or whether
the numbers are good, but DP benefits are Federal taxable
income to the employee.

Phil Marti
Clarksburg, MD

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Nan Eklund wrote:

- quote -

You didn't specify client's state -- and I think it might
make a difference. My CA employer seems to believe that the
employee's share is not deductible, but the employer's
contribution is not taxable to the employee. (Federally --
in CA, a "registered domestic partner"'s health care MAY BE
deductible.)

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- quote -

It is true that the health insurance for domestic partners
(but not a married partner) is taxable and added to the w-2
amount for the employee. However, on the California return,
you can make a subtraction adjustment on the CA form (label
it domestic prtnr hlth insur) and subtract out the amount.
Of course, on federal returns, no adjustment gets made.

Jan Zobel EA

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an Eklund wrote:

- quote -

For sure it is taxable on the federal return unless the DP
is her dependent. This is no change from current law.

Assuming we are discussing the great state of CA, I am not
aware of any change to existing law. I.e., the health
insurance benefits are tax-free in CA.

--
Alan
http://taxtopics.net

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Client just called. She wants to put her domestic partner
on her health insurance and was told by her school district
employer that the insurance will be taxable to her as of
January 2005 and cost her some $3700 for the year. I
couldn't locate any information - so far. Anyone know?

Nan, EA in LA
Entrenched belief is never altered by the facts.....

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