USA Today writes: Question: I live in Washington state, where gay marriage is legal, we have no state income tax, and we are a community property state. My partner and I have been together for 12 years, but we have not yet converted our domestic partnership to marriage since it became legal in December. In previous years we have both filed our federal returns as single, but this year we bought a house together and we are wondering what the proper way would be for us to file our federal income tax?
Annette Nellen, CPA Answers: Federal law does not treat same-sex or registered domestic partners (RDPs) who are married under state law as married. Thus, such couples may not file their federal income tax return as married filing jointly (MFJ) or as married filing separately (MFS). So, being married under state law will not change your filing status under federal law.
Because you live in Washington state though, being married or RDPs changes how much income you each report on your federal returns. The IRS will follow state community property laws and has provided guidance for RDPs and same-sex couples in three such states: California, Nevada and Washington.
Basically, spouses or RDPs in these states split their community property income, with each spouse or partner reporting half of it on their federal returns. The IRS has provided several FAQs, as well as Publication 555, and Form 8958, to help in determining how to report community property income (as well as deductions and credits) on each spouse's federal tax return.
You each still file a separate return (not a joint return). Note that there could be changes to the filing rules depending on the outcome of the U.S. Supreme Court's decision on the constitutionality of the Defense of Marriage Act (DOMA).
For the mortgage interest, if you are married or RDPs in Washington, you can show the split of the mortgage interest on Form 8958 (and report your share on yourSchedule A, with a reference to "See Form 8958"). If you are not RDPs or a married couple in Washington, you each determine your share of the mortgage interest and you each deduct your share that you paid.
One of you likely received a Form 1098, Mortgage Interest Statement, with only one name and Social Security Number on it. The IRS suggests that the other payor attach a statement to their return explaining that they paid part of that Form 1098 amount and provide the name and address of the person who received the Form 1098, and how much of the mortgage interest each owner paid. On Schedule A, Line 11 for mortgage interest, add "See attached" so the IRS knows the statement explaining the interest amount is on the return (since the IRS does not have a Form 1098 for that owner). For details, see IRS Publication 936, page 9. For more information:
Annette Nellen, CPA
San Jose State University, San Jose, Calif.
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