The new tax rules for Registered Domestic Partners in California (and other community property states) have been in the news a lot lately (here and here, for example). Unfortunately, most of the coverage seems to be focused on the complexities and filing issues introduced for 2010 tax returns. What’s not being mentioned is the fact that many California Registered Domestic Partners who began their partnership in 2007 or earlier are running out of time to amend their returns and claim a refund.
California is the only state to extend community-property treatment of income to Registered Domestic Partners in 2007. (Washington and Nevada have since followed suit, but the changes didn’t take effect until later years.) Because of this, individuals who were in an RDP relationship in California in 2007 have the option–but not requirement–to amend their 2007 returns if the rule change is beneficial to them.
However, because the IRS limits the amount of time you have to file and claim a refund, most taxpayers will run out of time to file an amendment for refund for 2007 in April of this year.
How much could it cost you if you don’t amend? Well, it depends on your situation, but generally the biggest factor to consider is how much of a difference existed in the income of the two partners. Generally the bigger the difference, the bigger the refund. The average amount of refund I’ve seen so far has been around $1,000. The largest refund for a single year I’ve prepared was worth around $10,000!!
Don’t leave that kind of money on the table! Talk to a tax professional, and get your 2007 amendment filed before the April filing deadline!