Community Property Allocations for Same-Sex Married Couples

Couples in same-sex marriages can’t file their federal taxes as “married.” But if a same-sex married couple lives in a community property state, they must apply community property laws on their federal tax returns.

What is community property law?

Nine states follow community property law. The 40,000-foot definition of community property for tax purposes is that each spouse is entitled to 1/2 of the other spouse’s income and deductions. These states follow community property law:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Texas
• Washington
• Wisconsin

When married couples in these states file separate tax returns, they must apply community property law. So each spouse must claim 1/2 of their own income and deductions and 1/2 of their spouse’s income and deductions.

Of the states shown above, California, Nevada and Washington recognize same-sex unions in the form of “registered domestic partnerships” (there are also some same-sex married couples in California, because California allowed same-sex marriage for a few months in 2008).

While couples in these 3 states can’t file as married on their federal returns, they MUST apply community property laws on their federal tax returns.

How Does it Work?

Here’s an example:

Mike and Ike are in a same-sex domestic partnership in California. Mike has income of $60,000 and Ike has income of $40,000. They cannot file their federal tax returns as married, but they must apply community property laws on their federal tax returns. Mike will file a tax return as either single or head of household, and will show $50,000 of income on that return (1/2 of his income and 1/2 of Ike’s income). Ike will do the same thing.

Is this Required or is it Optional?

The short answer is, per the IRS, it’s required.

Resources

• IRS FAQ
• IRS Publication 555

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