How does the FTB handle tax liabilities for a Registered Domestic Partnership in California?

The California Franchise Tax Board (FTB) requires Registered Domestic Partners (RDPs) to file state income taxes using the same rules and filing statuses as married spouses. You cannot file as "single" or "head of household" for your California tax return. Here is how to handle your tax liabilities with the FTB: Step 1: Choose Your State Filing Status You and your partner must decide whether to file as "married filing jointly" or "married filing separately" on your California tax return. In most cases, filing jointly results in a lower tax liability. Step 2: Prepare Your Separate Federal Returns First The IRS does not recognize RDPs for federal tax purposes. Therefore, you must each file a separate federal return (Form 1040) using the "single" or "head of household" status. On these returns, you must properly allocate community income and separate income according to California's community property laws. This generally means each partner reports 50% of the income earned by both partners during the partnership. Step 3: Create a "Mock" Joint Federal Return To prepare your California return, you must create a "mock" or "pro forma" federal return. Combine all income, deductions, and credits from both of your individual federal returns onto a single Form 1040 as if you were filing jointly with the IRS. Do NOT file this mock return with the IRS; it is only a worksheet. Step 4: File Your California State Return Use the figures from your mock joint federal return to complete your California Resident Income Tax Return (Form 540). Select either "married filing jointly" or "married filing separately" as your filing status. You must attach a copy of your mock federal return to your state filing. File your return with the FTB by the annual April 15 deadline. Important details and nuances: The key challenge is the difference between federal and state law. You are treated as single individuals for federal tax purposes but as a married couple for state tax purposes. The "mock" federal return is the bridge that allows you to accurately transfer your combined financial data to your California return. Warnings and limitations: This process is complex. Mistakes in allocating community property on your federal returns or preparing the mock return can lead to errors and potential audits from both the IRS and the FTB. This guidance applies only to RDPs registered with the California Secretary of State. This is general information and does not constitute legal advice. For complex situations, especially those involving business income, investments, or out-of-state assets, consult with a qualified California attorney or a tax professional experienced with RDP filings.