Health coverage for a domestic partner, and any children of a domestic partner, is typically a taxable benefit.
The federal government does not recognize domestic partnership for tax purposes. Employer contributions to domestic partner health premiums, including domestic partner children, are counted as taxable im-puted income by the Internal Revenue Service (IRS). By comparison, no taxable imputed income results from employer contributions to a legal spouse’s health premiums. In addition, employee or retiree premium contributions for domestic partner health benefits are paid post-tax. Employee or retiree premium contribu-tions for a legal spouse are paid pre-tax.
The Internal Revenue Service offers a tax break for health-related expenses incurred by a “qualifying relative.” Under IRS code section 152 (as modified by Code 105 (b)), a domestic partner and children of a domestic partner, qualify for favorable tax treatment if:
If an enrolled dependent meets all these requirements the employee or retiree can submit a declaration form to HSS and there will be no imputed income for the employer contribution to dependent health premiums. The HSS declaration form must be filed by required deadlines and is valid for one tax year. An individual declaration must be submitted every year for each qualifying dependent. Click here for the Declaration for Pre-Tax Premium Deduction form
The health benefits of a domestic partner, and children of a domestic partner, are entitled to equitable tax treatment under California state law. Equitable tax treatment under state law requires obtaining the California State Declaration of Domestic Partnership from the Secretary of the State of California. A domestic partnership is established in California when both persons file a Declaration of Domestic Partnership with the Secretary of State, and at the time of filing, all of the following requirements are met:
For more information about California regulations see:
This information may not include everything you need to know. The Health Service System cannot provide tax advice. Please consult with a professional tax advisor before taking any action. You remain subject to all state and federal tax law and will be responsible for any consequences that result from the forms, documents or declarations submitted to the Health Service System.