What Is a Registered Domestic Partnership (RDP)?
“RDP” stands for Registered Domestic Partnership. It’s a legal recognition provided by some states, including California, that offers couples, both same-sex and opposite-sex, many of the same legal rights, responsibilities, protections, and benefits as those granted to married spouses. This can include rights related to inheritance, property ownership, medical decision-making, and other aspects typically associated with marriage. The registration typically involves filing specific forms with a state agency to officially record the partnership.
The following states recognize domestic partnerships: California, Colorado, Hawaii, Illinois, Maine, Maryland, New Jersey, Nevada, Oregon, Washington, and Wisconsin. Of these states, California, Nevada, and Washington are also considered community property states.
Tax Guidelines for Registered Domestic Partners – Federal
For federal tax purposes, Registered Domestic Partners (RDPs) are disregarded and are not treated as married. They cannot file a married-filing-joint or married-filing-separate return. Each partner must file using single status or head of household if they qualify. Because the IRS does not recognize RDPs as married, the way income is reported can be confusing, especially for those living in community property states like California. In these states RDPs must follow community property allocation rules for federal tax purposes where partners equally share income and withholdings for federal reporting, yet deductions and credits must still be determined on an individual basis. An additional complication is that itemizing does not have to match between federal and state returns. An RDP may take the standard deduction on their federal return but still itemize on their California return if it results in a lower tax, and vice versa. California does not require RDPs to follow the federal deduction choice.
For Registered Domestic Partners living in community property states such as California, most income and deductions are treated as community property for federal reporting purposes. This means that wages earned during the partnership, investment income from joint or community accounts, and business income from a sole proprietorship funded with community assets are shared equally. Each partner reports one-half of this community income and one-half of any federal tax withheld.
Deductions paid from community funds—such as mortgage interest, real estate taxes, charitable contributions, medical expenses, and state or local taxes—are also divided equally. Retirement income earned during the partnership and paid from community assets is similarly split.
As a general rule, when community funds are used to earn income or pay deductible expenses, each partner generally reports one-half of the income or deduction on their separate federal returns.
Certain items, however, remain separate and are reported only by the partner to whom they belong:
- Estimated tax payments are credited solely to the person whose Social Security number appears on the payment.
- Student loan interest may only be deducted by the borrower legally responsible for the loan, and education credits are limited to the taxpayer who claims the student as a dependent and paid the qualifying expenses.
- Similarly, health insurance for a 2% S corporation shareholder-employee is deductible only by the shareholder, not by the non-employee partner, since the IRS does not treat RDPs as spouses.
- IRA deductions are also determined individually, based on each partner’s own income and eligibility, though a non-earning partner may still contribute under the spousal IRA rule. Gifts, inheritances, and income or assets acquired before the partnership remain separate property as well.
Tax Guidelines for Registered Domestic Partners – State
California treats Registered Domestic Partnerships the same way it treats marriage and if you enter into a RDP agreement by December 31st you are considered married for the full year. On your tax return you may choose between 2 statuses: married filing joint or married filing separately. You may not file as single as you do on the federal return, although in some instances a married filing separate individual may also qualify as head of household.
Each state has their own filing requirements, so be sure to review the state requirements in addition to the federal requirements.
What Happens with Taxes When an RDP Ends ?
A Registered Domestic Partnership (RDP) can end either by divorce/dissolution or by the death of a partner, and each outcome has different tax implications at the federal and state levels. For Federal tax purposes, the IRS does not recognize Registered Domestic Partnerships as marriage. This means that before and after the partnership ends, each partner continues to file their federal return as single, or head of household if they qualify. Dissolving the partnership does not change anything on the federal return.
In contrast, since California treats Registered Domestic Partnerships the same way it treats marriage, when an RDP ends through dissolution, the state treats it as a divorce, and from that point forward each person files their California return as single or head of household, if they qualify. If the partnership ends because a partner dies, the surviving partner may still file as Married/RDP for the year of death and then files as single or head of household in subsequent years.
While the partnership exists, California’s community property rules apply. Most income such as wages, investment earnings, and tax withholdings, is split equally between partners, regardless of whose name it’s under. Once the partnership is dissolved, those community property rules stop, and each partner reports only their own income, deductions, and withholdings. Property transfers made as part of ending the RDP are usually not taxable. Retirement accounts, health insurance coverage, and credits may also need to be adjusted when the partnership ends. This split creates unique challenges, especially when dividing income and property, making it important for RDPs to understand both federal and state rules when filing taxes.
If you’re unsure how these rules apply to your situation, it’s always best to talk to a qualified tax advisor who can help you navigate both sets of laws.
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