If you work or live in the Golden State, then you can expect to pay your fair share of taxes. Regardless of if you’re a newcomer or a native Californian, the tax law is quite clear regarding filing status. According to the California Franchise Tax Board, typically when you use the married filing separately status on your federal tax return, then you must also file using this status on your state returns. But, there are exceptions to this rule. Community property rules apply to your income when you file as married filing separately, same-sex married filing separately or registered domestic partnership filing separately in the state of California.
Generally speaking, married couples in California will receive superior tax treatment if they file jointly rather than separately.
Exploring Community Income
Usually, married couples fare better when filing jointly than if they were to file separately as far as taxes are concerned. But, because every situation is unique, it is best to determine which filing status you’re eligible to use that provides you with the most advantageous tax breaks. Although California does let married taxpayers file separately – if they used this status on their federal returns – it is a community property state, so community property rules apply to the division of income when filing separately.
This means that all of the property, assets and income acquired by a husband and wife, registered domestic partners and same-sex married couples during the course of the marriage or partnership is owned by both people equally. When you file taxes separately in a community property state such as California, you must also divide and report these assets and income on California tax returns. The only way to avoid this is if the property is determined to be solely owned by one spouse, such as inheritances or dividends from investments made prior to marriage.
Identifying Exceptions to the Rule
In California, registered domestic partnerships receive the same treatment as married couples for tax purposes. However, the IRS does not recognize registered domestic partners as married, nor give them the ability to file taxes using one of the married statuses. In this case, you must file as a head of household or as a single filer for federal taxes. But for California state taxes, if you're in a registered domestic partnership, you can only file your return as married filing jointly or married filing separately. Otherwise, you need to use whatever filing status you used on your federal return. It is worth noting that registered domestic partnership is not automatic; you need to register with the California Secretary of State in order to use one of the married statuses when filing taxes.
Another exception applies to active members of the United States armed services or auxiliary military branches for the year you plan to file, or if you're a nonresident for the year and had no California sources of income. In this instance, you can file jointly for federal returns, but separately for California taxes if one spouse meets these requirements.
- California Franchise Tax Board: Tax Calculator
- California Franchise Tax Board: 2017 FTB Publication 1031
- Internal Revenue Service (IRS). "Taxpayers Should Include Tax Plans in Their Wedding Plans." Accessed Aug 13, 2020.
- Internal Revenue Service (IRS). "Publication 17: Tax Guide 2019," Pages 22-23. Accessed Aug 13, 2020.
- Internal Revenue Service. "Publication 502 (2019), Medical and Dental Expenses: Separate Returns." Accessed Aug 13, 2020.
- Internal Revenue Service (IRS). "About Publication 555: Community Property." Accessed Aug 13, 2020.
- Internal Revenue Service (IRS). "About Form 8379, Injured Spouse Allocation." Accessed Aug 13, 2020.
Tara Thomas is a Los Angeles-based writer and avid world traveler. Her articles appear in various online publications, including Sapling, PocketSense, Zacks, Livestrong, Modern Mom and SF Gate. Thomas has a Bachelor of Science in marine biology from California State University, Long Beach and spent 10 years as a mortgage consultant.