Domestic Partner Benefit taxation

[Guest bbruno]

In California, for State employees adding a domestic partner, the employee is subject to additional tax withholding on the differential premium/contribution as ti is deemed as taxable income. Is there any IRC reg., interpretation of reg. of ruling that would lend itself to allow the relief of this imputed tax liability either in and of itself or based on the enacting of State tax law relieving this imputed tax on the State level? We're trying to see whether of not there is a way, should it exist, to relieve this part of the imputed tax for State employees in this situation.

[Joe Priselac]

bbruno,

Section 152 of the Internal Revenue Code is where you find the definition of an eligible dependent. For the individuasl to be considerd an eligible dependent, the employee must be able to claim them as a dependent for income tax purposes i.e. provide more than half their support for the year. Depending on their individual circumstances, some might be able to have the benefit tax free. In addition to the support requirement, the domestic partner must also live with the taxpayer for the entire year and their cohabitation must not be in violation of any local laws.