New York Domestic Partnership Tax Implications 2024 – All You Need to Know

If you are in a committed relationship, you may be considering a marriage or domestic partnership. In many ways, marriages and domestic partnerships are similar; however, there are important differences that may impact the choice you and your partner make. A marriage offers all the legal benefits found in a domestic partnership, but marriage is a much more formal relationship. This is not ideal for some couples, who instead choose to form a legal relationship through a domestic partnership.

Domestic Partnership vs. Marriage

Domestic partnerships are legal relationships that committed couples who live together and are financially entwined with each other enter into as an alternative to marriage. Historically, domestic partnerships were most commonly used by same-sex couples, as they could not get married prior to 2011, when marriage equality was legalized in the state. Filing for this type of relationship affords the couple some rights that are given to married couples, such as access to a partner’s health insurance benefits, inheritance rights, and the ability to take family leave to care for an ill partner or their child. Domestic partnerships can be ended by filing a termination statement in the office that registered the partnership; there is no wait time to end a domestic partnership. Although domestic partnerships are recognized by New York law, they are not federally recognized.

Marriage is the official, government-recognized union between two people. It is a legally binding contract between two individuals who have committed to sharing their lives. The couple must secure a marriage license and participate in a marriage ceremony. Following the ceremony, the marriage license must be returned to and filed with the issuing office. Marriage affords the couple all the rights of a domestic partnership, but it expands on those rights to include things like federal benefits, access to Medicare and Social Security, and immigration benefits. Ending a marriage requires the couple to complete the complex divorce process and obtain a judgment of divorce from the court.

Domestic Partnership Tax Implications

One of the areas where domestic partnerships differ from marriages is filing taxes each year. 

• Federal Filing
  Since the federal government does not recognize domestic partnerships, the couple must file separately, or one person will need to file as head of household. Losing out on the ability to file jointly means that you are likely to miss out on some of the tax benefits that married couples enjoy. You can, however, file your New York taxes jointly.
• Credits and Deductions
  Domestic partners in New York may be eligible for certain tax credits and deductions. For example, some expenses related to the partnership may be deductible, such as health insurance premiums costs. You may also qualify for the Earned Income Tax Credit, which provides a tax break for low- to moderate-income families.
• Inheritance TaxesNew York does extend some inheritance tax benefits and protections to domestic partnerships, but there are requirements and limitations involved. Domestic partners are not classified as legal heirs unless a will or other legal document designates them as such. Without this documentation, the partner may not be able to inherit assets or property, and if it is inherited, there may be applicable inheritance taxes.
• Property Taxes
  If you own a home with your partner, you may qualify for property tax benefits. For example, first-time homeowners may be eligible for tax credits that help reduce their overall tax liability.

It is important to understand all the tax implications for a domestic partnership, especially if you are debating between a domestic partnership and marriage. An estate attorney can explain the differences and help you create an estate plan that affords you and your partner the most protection if you choose a domestic partnership. Some of the rights that are not granted to domestic partners can be compensated for in a thorough estate plan.

FAQs About New York Domestic Partnership Tax Implications

Can Domestic Partners File Jointly or Married Filing Separately?

Domestic partnerships are not recognized on a federal level, meaning that these individuals cannot file their federal taxes jointly or married filing separately. However, domestic partners can file their taxes jointly in New York. This allows the couple to take advantage of some of the benefits that come with filing jointly, but only at the state level. Domestic partnerships are unfavorable for some due to this reason.

Is There a Wait Time to Begin or End a Domestic Partnership?

There is no wait time to begin or end a domestic partnership. Once the notice of domestic partnership has been filed, it is effective immediately. Domestic partnerships can also be dissolved immediately as well. Once the paperwork has been filed to end the partnership, the effects are immediate. This is one of the benefits of domestic partnerships; they can be ended without the complex legal process of divorce.

Can You Get Married After Being in a Domestic Partnership?

Some couples choose to enter a domestic partnership, and then decide to get married at a later date. In this instance, the domestic partnership will not affect the marriage at all; they can get married like any other couple. The partnership does not even need to be dissolved prior to the marriage, as the marriage will end the partnership once the license has been filed.

What Are the Requirements to Enter Into a Domestic Partnership?

To enter into a domestic partnership, neither party can be involved in an existing marriage or partnership or have been in a different relationship within the previous six months. The parties must have resided together for the preceding six months. The individuals must also be 18 years or older and not be blood-related in a way that prevents marriage under New York law. The application must be submitted in the jurisdiction of their home residence.

Your Domestic Partnership

Ultimately, the choice between marriage and domestic partnership is a personal decision that should be made by the involved parties. Trotto Law Firm, P.C., can help you make this decision by explaining the impacts that each choice will have on your specific circumstances. Reach out to our team to schedule a consultation to learn more about domestic partnerships and the tax implications that arise once you enter into this type of relationship.