| Registered Domestic Partners in Oregon |
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| Introduction |
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The 2007 Oregon Legislature passed the Oregon Family Fairness Act which created registered domestic partnerships.
A registered domestic partnership is “a civil contract entered into…between two individuals of the same sex who are at least 18 years of age, who are otherwise capable and at least one of whom is a resident of Oregon.”
If you have entered into a registered domestic partnership in Oregon, this webpage contains important tax information about your Oregon income tax return.
Oregon does not recognize civil unions, domestic partnerships, or same-sex marriages certified in other states.
If you moved to Oregon and need information on registered domestic partnerships, please visit the Department of Human Services.
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| Filing your Oregon income tax return |
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In Oregon, registered domestic partners (RDPs) are subject to the same tax statutes and regulations that apply to married filers.
Just like a married couple, you may file jointly or separately. As an RDP, you can’t file using the single filing status on your Oregon return.
Generally, you must use one of the following filing statuses for Oregon:
• Registered domestic partners filing jointly, or
• Registered domestic partner filing separately.
When you file jointly with your partner, you may be able to take advantage of additional tax benefits; however, you will also be subject to additional tax responsibilities. For example, like married joint filers, RDPs filing jointly will be held jointly and severally liable for their entire tax liability.
Because of the differences in filing status between your federal return and your Oregon return, you must complete two federal tax returns:
- A federal income tax return that you will fill out and submit to the IRS using a single or head of household filing status. We’ll call this your actual federal return.
- Complete the second federal return as if you are married filing jointly or married filing separately. Use the information you calculate on the “as if” federal return to complete your Oregon income tax return.
Don’t submit the “as if” return to the IRS, but do include it with your Oregon tax return.
If you and your partner are filing separately, you each must submit an “as if” federal married filing separately return.
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| General filing instructions |
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If you were an RDP under Oregon law on December 31, 2009, or if you were an RDP during 2009, your partner died and you didn’t enter into a new RDP or marry during 2009, please follow these directions for filing your 2009 income tax return:
1. Complete your federal forms (1040, 1040A, 1040EZ) for each partner using the appropriate federal filing status, such as single or head of household. File these returns with the IRS.
2. Fill out another federal form as if you are filing a joint or separate federal return. Use all the same IRS rules and procedures that apply to married couples. Don’t file this “as if” form with the IRS, but do include it with your Oregon tax return. 3. Complete your Oregon return jointly (using the RDP filing jointly status) or separately (using the RDP filing separately status) or other filing status if you qualify. The filing status you use on your Oregon return must match the status you use on the “as if” federal return. You must take the information from the “as if” federal return and not your actual federal return that you file with the IRS (except for the federal income tax liability subtraction—see below for more information).
If you file your taxes using software . . .
Information about filing electronically (e-file). We encourage you to e-file when possible. Some software supports RDP filings. You should check the software before buying it to ensure that it allows you to file as an RDP.
If a tax professional files your returns, ask if their software supports RDP filings. Take these steps to ensure that your income tax returns are filed correctly:
1. Don’t file your federal and Oregon electronic returns together. Each RDP must file individual federal forms with the IRS in accordance with federal law. This usually means that each RDP must file a separate federal return.
2. After you file your federal returns, complete your “as if” federal return. Use the information from your “as if” return to complete your Oregon return.
When e-filing your Oregon return, you must file it as a “state only” submission.
Information about mailing your software-prepared return (2-D barcode). Check the software before you buy it to make sure it allows you to file as an RDP. If you use a tax professional to prepare you returns, you should contact them to see if the software they use supports RDP filings.
When you complete and review your returns on your computer, follow the instructions under “Filing Paper Returns” (below).
If you mail your returns to us . . .
Filing paper returns. To ensure that your income tax returns are filed correctly:
- File your actual federal forms with the IRS.
- After completing your “as if” federal return, fill out the appropriate Oregon form (40, 40S, 40N or 40P) to file jointly or separately as RDPs. Use the information from your “as if” return to complete your Oregon return(s).
- Submit the following to the Oregon Department of Revenue:
- Your actual federal return(s).
- Your “as if” federal return. Write “RDP FOR OREGON ONLY” at the top of the return; and
- Your Oregon return.
If you and your RDP file separate Oregon returns, please send the returns in the same envelope but don’t staple the returns to each other.
The mailing addresses are available in the 2009 Oregon income tax booklets.
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| What changes can you expect? |
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Federal law limits certain deductions, exclusions, and credits based on filing status and/or federal adjusted gross income (AGI). Many of the limits are the same for single filers as for joint filers. For married persons choosing to file separately, the limits are usually half the amount allowed for single or married joint filers.
As an RDP, you can no longer use the single filing status on your Oregon return. The change in your filing status and federal AGI may require adjustments to your Oregon return.
These webpages explain changes to common credits, deductions, or issues that you will want to know as you prepare and file your taxes, including:
• Capital gains and losses.
• Earned Income credit (EIC).
• Federal income tax subtraction.
• Individual Retirement Accounts (IRA).
• Medical and dental expenses.
• Medical insurance premiums paid for a partner by an employer (imputed income).
• Passive real estate loss.
• Pension plans.
• Principal residence gain exclusion.
• Special Oregon medical deduction.
• Student loan interest.
• Working Family Child Care credit (WFC).
To help you complete your Oregon return, we’ve listed some examples of the above-listed deductions, exclusions, and credits.
The examples show only some of the situations in which the change in your filing status and federal adjusted income could impact your Oregon tax return. When completing your “as if” federal return, make sure to carefully follow all rules and regulations that apply to married filing jointly or married filing separately persons in the IRS instructions to correctly determine your Oregon tax liability.
It’s very important to keep copies of all “as if” returns with your tax records.
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| Capital gains and losses |
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Did you have a capital gain or loss, including any capital gain distributions or a capital loss carryover from 2008? If so, you must complete an “as if” federal Schedule D.
Capital losses offset any capital gains. For joint and single filers, if the losses exceed the gains, you may deduct up to $3,000 ($1,500 for married/RDP filing separately) of the excess loss as a deduction on your federal return. This may result in RDPs needing to deduct a different amount on their individually filed federal returns than on their “as if” joint federal return. Consider the following examples:
Example 1: Casey and Pat are Oregon RDPs. For federal purposes, both Casey and Pat use a single filing status. In 2009, Casey and Pat each sold securities (stocks) resulting in long-term capital losses of $4,200 and $2,500, respectively. On their individual federal returns, Casey’s capital loss is limited to $3,000 leaving $1,200 in long-term capital loss carryover for 2010 while Pat can deduct the entire $2,500.
When Casey and Pat recalculate their capital loss on their “as if” federal joint return, they are limited to a $3,000 capital loss deduction for 2009. Casey and Pat’s total capital losses are $6,700 ($4,200 + $2,500) and their long-term capital loss carryover (for Oregon purposes) for 2010 is $3,700.
If Casey and Pat choose to file separately, each is limited to a $1,500 capital loss deduction on their “as if” federal return.
Casey and Pat use the following schedule to keep track of their capital gains and losses for their federal and “as if” federal returns.
| | 2009 Net Capital Loss | Loss Taken as a Deducation on Return | 2010 Carryover | | Casey's individual federal return | $4,200
| $3,000
| $1,200
| Pat's individual federal return
| $2,500
| $2,500
| $0
| Casey's "as if" RDP filing separate federal return used to compute Oregon tax
| $4,200
| $1,500
| $2,700
| Pat's "as if" RDP filing separate federal return used to computer Oregon tax
| $2,500
| $1,500
| $1,000
| Casey & Pat's "as if" RDP filing jointly federal return used to computer Oregon tax
| $6,700
| $3,000
| $3,700
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Important: Keep track of the carryover differences to correctly calculate capital gain or loss in future tax years for Oregon.
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| Earned Income Tax credit (EIC) |
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You may have qualified for the earned income credit on your actual federal return, but you may not qualify for it on your Oregon return. The Oregon earned income credit is based on your federal earned income credit from your “as if” federal return.
Example 2: Sam and Rick are Oregon RDPs. Sam has one child and is above the EIC income threshold for single filers and couldn’t claim the EIC on his original federal return. Rick also has one child and claimed an EIC of $2,112 on his original federal return. On their joint “as if” federal return, Sam and Rick’s combined income claiming two children qualifies them for a federal EIC of $3,500. Sam and Rick’s EIC on their 2009 joint Oregon return will be 6 percent of the amount on their joint “as if” federal return.
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| Federal income tax liability subtraction |
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Oregon allows a subtraction for your current year’s federal income tax liability after credits. The amount of your subtraction is the amount that you and your RDP actually paid in federal income tax. Don’t use the amount calculated on your “as if” return; instead use the sum of the federal tax amounts from both RDP’s actual federal returns.
Use the federal tax liability subtraction worksheet in the 2009 Oregon income tax booklet to determine your subtraction amount.
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| Individual Retirement Account (IRA) contributions |
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Because the amount a taxpayer can deduct for contributions to a traditional IRA is different for married taxpayers, an RDP filing jointly may need to deduct a different amount on their joint “as if” federal return than on their actual individual federal returns. An RDP filing separately may have a lower deduction on their separate “as if” return.
Example 3: George and Rob are Oregon RDPs. George contributes $3,000 to a traditional IRA. George can’t deduct any of the contributions because he has exceeded the income limitation for single filers.
Rob contributed $2,000 to a traditional IRA. Rob’s income is low enough that he can deduct all $2,000 in contributions as a single filer.
On George and Rob’s “as if” joint federal return they are allowed to deduct all $5,000 in contributions because their joint income does not exceed the income limitation for joint filers.
Example 4: Randi and Leslie are Oregon RDPs. Randi makes contributions of $3,000 to a traditional IRA. Randi’s income is low enough for a single filer that she can deduct all $3,000 in contributions.
Leslie also contributed $3,000 to a traditional IRA. Leslie can also deduct all $3,000 in contributions as a single filer.
Randi and Leslie decide to file separately for Oregon. After applying the federal limits for married filing separately on their “as if” tax return, neither can deduct any of their IRA contributions because their income is over the income limitation.
Please refer to the 2009 IRS Publication 590 for all instructions, limitation amounts, and worksheets for calculating IRA deductions.
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| Medical and Dental Expenses |
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You may deduct qualified medical and dental expenses you paid for yourself, your spouse or RDP, and your dependents. As a result, you may have a different amount on your federal “as if” Schedule A than your actual federal Schedule A.
Example 5: Jennifer and Mallory are RDPs. For federal purposes, they each used a single filing status and itemized deductions. Jennifer pays for both her and Mallory’s medical expenses. On Jennifer’s individual return, she deducted only her medical and dental expenses. She can’t deduct Mallory’s medical expenses on her original federal return because Mallory isn’t a dependent on her return and is not recognized the same as a spouse under federal law. Mallory claimed the standard deduction on her original federal return.
Jennifer and Mallory file separately for Oregon. On Jennifer’s “as if” federal Schedule A, Jennifer can include the medical and dental expenses paid for Mallory. Because Jennifer and Mallory have chosen to file as RDP filing separately, Mallory must also itemize deductions on her “as if” federal and Oregon returns.
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| Medical insurance premiums paid for your partner by an employer |
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Oregon doesn’t tax you on any medical insurance premiums paid by your employer for your RDP that are included in your income. Federal law, however, requires that you include these amounts in your income unless your partner is a dependent.
To exclude these amounts on your “as if” federal return:
1. Check the amount your employer included in Box 1 of your Form W-2 for health insurance premiums paid for your RDP beginning with the month that you became an RDP in Oregon. If you were an RDP for the entire year, you may exclude all amounts included in your income.
Note: If you became an RDP at any time in 2008, you can exclude all amounts included in income for that year only. Starting January 1, 2009, you can only excluded amounts included in income from the date you entered an RDP. 2. Enter the sum as a negative amount on the “other income” line of your “as if” federal return. Identify the subtraction as imputed income.
Example 6: Alex received $4,800 in imputed income in 2009 for health benefits for Brian that was paid by Alex’s employer. The employer included the $4,800 in Alex’s W-2 and he has included that amount as wages on his federal return. Alex and Brian became Oregon RDPs in June, 2008. Alex does not have to pay tax on the imputed income after he became a RDP. Alex’s monthly imputed income was $400 ($4,800 divided by 12 months). The amount on the “other income” line of Alex and Brian’s joint “as if” federal return is a negative $2,800 ($400 times seven months).
Taxable benefits for former RDPs: If you dissolved your RDP during the year, you may be allowed a subtraction for the imputed value of certain fringe benefits provided by your employer for your RDP during the part of the year you were still RDPs. You must have included the imputed income in your federal income to claim the Oregon subtraction.
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| Passive activity loss limitations on rental real estate activity |
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The rules and limits for deducting a loss when you actively participate in a passive rental real estate activity are different for married taxpayers.
Example 7: Cindy and Dorothy are Oregon RDPs. In 2009, Cindy had partnership income of $8,000, and a $30,000 loss from rental real estate activities. Cindy can use the rental activity loss to offset the $8,000 in passive income from the partnership. The remaining $22,000 in loss can then be used to offset nonpassive income such as wages.
Dorothy had a $13,000 loss from rental real estate activities. Dorothy’s income is low enough that she can use the $13,000 to offset nonpassive income.
On their “as if” federal joint return, Cindy and Dorothy have a total passive activity loss of $43,000 from rental activities in which they actively participated. Of that amount, $8,000 can be used to offset Cindy’s passive partnership income. However, Cindy and Dorothy’s joint income is more than the income limitation so they aren’t allowed to offset any nonpassive income. They also aren’t allowed to offset nonpassive income if they filed separately.
Important: Keep track of the unused passive activity loss difference to correctly offset passive income in future tax years for Oregon.
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| Pension plans |
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Some qualified pension plans may prohibit certain asset transactions unless they are part of a survivor benefit plan or from a court ordered division (generally divorce or property division).
Because federal law does not recognize an RDP in the same manner as a spouse, you may have taxable income or penalties.
You should check with your tax professional regarding both the federal and state tax consequences of a court ordered division.
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| Principle residence gain exclusion (IRC § 121) |
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Note that the limits for the amount of gain that can be excluded from gross income on the sale or exchange of a principle residence are different for taxpayers who are married filing jointly.
Example 8: Dominic and Trent are Oregon RDPs. Dominic and Trent each own a 50 percent interest in a house. They sell their house for a gain of $260,000. They each meet the requirements for ownership and use to exclude the gain on the sale of the residence from gross income. Both Dominic and Trent, each using a single filing status, can exclude $130,000 of gain on their respective federal returns.
Dominic and Trent can exclude the entire $260,000 on their “as if” federal joint return as well.
Example 9: Sally and Mona are Oregon RDPs. Sally and Mona share a home that is owned by Sally. Sally sells the house for a gain of $300,000. Sally meets the ownership and use requirements and, therefore, can exclude $250,000 of gain using the single filing status. She must recognize $50,000 of gain in gross income on her federal return. Mona has lived with Sally for three years, but is not an owner.
On their joint “as if” federal return, Sally and Mona can exclude the entire $300,000 allowed to married filing joint taxpayers when both meet the use requirements and one meets the ownership requirements.
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| Special Oregon medical deduction |
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Remember to calculate your Oregon special medical deduction using your “as if” federal Schedule A. If you (or your RDP, if filing jointly) were age 62 or older on December 31, 2009, you may deduct the smaller of line 1 or line 3 from your “as if” federal Schedule A as the special Oregon medical deduction.
To claim this deduction, you must itemize your deductions for Oregon. You can do this by filling out a Schedule A for both federal and Oregon or filling out a Schedule A for Oregon purposes only.
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| Student loan interest |
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Take note that the phase out of the deduction for interest paid on a qualified student loan is different for married taxpayers which may affect how much you will be able to deduct for Oregon purposes. There is no deduction allowed for those using the married/RDP filing separately filing status.
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| Working Family Child Care credit (WFC) |
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If you claimed the WFC in previous years, make sure that you still qualify.
Remember: Both you and your RDP must be working or attending school to qualify for this credit unless one of you meets the disability exception. If you decide to file separately, you may not qualify for this credit. Make sure you use your “as if” return to complete form WFC.
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