Registered Domestic Partners in Oregon
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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."
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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Beginning in 2008, Oregon legally registered domestic partners (RDPs) are subject to the same tax statutes and regulations that apply to married filers. Oregon doesn't recognize RDPs before 2008.
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.
The federal government doesn't recognize domestic partnerships as married individuals for federal tax purposes.
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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If you were an RDP under Oregon law on December 31, 2012 or if you were an RDP during 2012, your partner died and you didn't enter into a new RDP or marry during 2012, please follow these directions for filing your Oregon 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).
4. Your "as if" federal return will be filled out as if you were married, so all personal, blind, senior, and dependent exemptions should be combined on the RDP filing joint Oregon return.
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.
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).
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.
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, 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 2012 Oregon income tax booklets.
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.
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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.
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 2011? 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:
Casey and Pat are Oregon RDPs. For federal purposes, both Casey and Pat use a single filing status. In 2012, 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 2013 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 2012. 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 2013 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"
Casey and Pat use the following schedule to keep track of their capital gains and losses for their federal and "as if"
||2012 Net Capital Loss
||Loss Taken as a Deducation on Return
|Casey's individual federal return
|Pat's individual federal return
|Casey's "as if" RDP filing separate federal return used to compute Oregon tax
|Pat's "as if" RDP filing separate federal return used to computer Oregon tax
|Casey & Pat's "as if" RDP filing jointly federal return used to computer Oregon tax
Keep track of the carryover differences to correctly calculate capital gain or loss in future tax years for Oregon.
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.
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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 2012 joint Oregon return will be 6 percent of the amount on their joint "as if" federal return.
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.
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Use the federal tax liability subtraction worksheet in the 2012 Oregon income tax booklet to determine your subtraction amount.
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An FSA is a tax-free account that allows you to use pre-tax dollars to pay for eligible out-of-pocket healthcare or dependent care expenses. Federal law does not allow you to exempt income for an RDP under an FSA unless your partner is considered a dependent under IRC 152.
If your partner would have been eligible to have healthcare or dependent care expenses reimbursed through an FSA, but did not qualify as an RDP, you may exclude these amounts on your federal "as if" return. Oregon doesn't tax amounts that would be eligible under an FSA if RDPs were allowed under those arrangements.
To exclude these amounts on your "as if" federal return:
- Determine the amount of dependent care or healthcare expenses paid during the year that were not eligible to be reimbursed from pre-tax dollars and included in income.
- Enter the sum as a negative amount on the "other income" line of your "as if" federal return. Identify the subtraction as "FSA."
Note: You can only exclude amounts included in income from the date you entered an RDP. Healthcare expense must qualify under IRC 213 (see IRS Publication 502). Dependent care expenses must qualify under IRC 21 (see IRS publication 503).
Amounts excluded for dependent care expenses on your "as if" return should be claimed on line 12 of Part III on your "as if" Form 2441. Dependent care expenses that can be excluded are limited to $5,000 for 2012.
Amounts excluded for healthcare expenses on your "as if" return can't be deducted as Medical and Dental expenses on your "as if" federal Schedule A.
Example 3: Sara and Shannon each have a child that they claim as a dependent on their federal returns. Each child attends daycare so that Sara and Shannon may work. Sara has an FSA through her employer that allows her to get reimbursed for dependent care expenses for her child, Amelia. However, she can't get reimbursed for the dependent care expenses incurred for Shannon's child, Ellie, because Ellie doesn't qualify as her dependent.
Sara and Shannon spent $4,000 for Ellie and Amelia in dependent care expenses in 2012; $2,000 for Ellie and $2,000 for Amelia. Sara is reimbursed $2,000 for Amelia's care expenses and that amount is not included in her taxable wages. However, the $2,000 spent on Ellie's care expenses was included in the taxable wages for Sara and Shannon.
Therefore, Sara and Shannon will report a negative $2,000 on the "other income" line of their "as if" federal joint return.
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.
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Example 4: 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 5: 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 2012 IRS Publication 590 for all instructions, limitation amounts, and worksheets for calculating IRA deductions.
Medical and Dental Expenses
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.
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Example 6: 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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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"
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: You can only exclude 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.
Alex received $4,800 in imputed income in 2012 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, 2012. 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.
The rules and limits for deducting a loss when you actively participate in a passive rental real estate activity are different for married taxpayers.
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Example 8: Cindy and Dorothy are Oregon RDPs. In 2012, 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.
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).
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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.
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.
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Example 9: 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 10: 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.
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, 2012 you may deduct the smaller of line 1 or line 3 from your "as if" federal Schedule A as the special Oregon medical deduction.
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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.
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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If you claimed the WFC in previous years, make sure that you still qualify.
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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.