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Couples in a domestic partnership have certain tax implications not shared by married couples. Knowing the federal and state regulations can save time, money, and frustration. The professional tax preparation team at Simplified Tax in Sparta, WI, has extensive experience in helping couples decipher the rules and avoid financial surprises down the road.

For starters, a domestic partnership generally means a relationship between two people of the same sex. However, in some states, the definition extends to common law couples and cohabitants over the age of 62. Depending on the state, some domestic partners are recognized as legal unions with rights similar to those available to married persons.

One of the key differences between domestic partners and married couples is how their income tax returns are filed. For federal filings, each individual in a domestic arrangement is required to file separate returns. If a person is married, they have the option of either filing jointly with their spouse or married filing separately. Filing guidelines for state tax returns may widely differ, and it's best to seek advice from a licensed tax preparation agent.

Tax Return Another key distinction is where the domestic partnered couple lives. Some states follow community property regulations, which means both individuals have rights to share assets, bank accounts, and other tangibles, such as homes and vehicles. These states typically allow couples to file joint state tax returns. For those community property states that don't have a personal income tax mandate, federal tax returns are filed according to laws within their home state.

Like married couples, domestic partners in certain community property states can report shared wages, interest, and dividends on their state income tax returns. For jointly-owned business, domestic partners are also permitted to decide which individual will take either the standard or itemized deduction. Likewise, if children are involved, only one individual can claim them as dependents.

The tax rules for domestic partnerships can be a bit tricky. With professional assistance, understanding what's permitted doesn't have to be a maze of confusion. Let the friendly and knowledgeable agents at Simplified Tax help prepare your tax returns. Call (608) 269-2633 to schedule a consultation. Visit the website for a wide range of services to gear up for the upcoming tax season.

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