NJ couple moves to CA at different times

[joanmcq]

My new clients are a same sex couple who are former NJ residents. They became a civil union in NJ, and that relationship is recognized in CA. Partner A got a job in CA and moved in late December 2011. Partner B retired from his job in NJ and moved to CA June 30, 2012. their house in NJ sold in late September.

For me, the CA is easy! I know I have to file a resident return for partner A for half the year; can I file joint, even though Partner B has no NJ source income for the period? I know I file NR for the second half of the year for both to take care of the NJ source income from the sale. I can't seem to find an allocation schedule or form that goes with the NJ1040; only one for the NR.

HELP!

[Guest Taxed]

I am trying to follow the example. If partner A moved to CA in Dec of 2011, then for tax year 2012 is he not a full resident of CA?

Partner B moved to CA in June 2012 so that is part year CA part year NJ.

If partner A had any income sourced in NJ in 2012 then should he not file as non-resident?

[jainen]

>>They became a civil union in NJ, and that relationship is recognized in CA<<

No. A New Jersey civil union is NOT considered "substantially equivalent" to California laws for same-sex marriage and registered domestic partners. They must file California returns using the same filing status as their federal returns. And they can't use community property laws to allocate income away from the wage-earner..

[joanmcq]

Why do you say that? Please point me to the cite.

[jainen]

>>the cite<<

Obviously the entire topic is still being sorted out. Family Code Section 299.2 is the relevant law. "A legal union of two persons of the same sex, other than a marriage, that was validly formed in another jurisdiction, and that is substantially equivalent to a [California] domestic partnership..."

Spidell (Big Blue Book) says, "NOTE: States that consider civil unions as marriages appear to be excluded from the substantially equivalent test." Last year Spidell reported that the California Attorney General had declined to name such states.

On the other hand, the New Jersey law was written to meet court objections to its earlier domestic partners law, so maybe it does count. I know at least one thing New Jersey does not allow is full spousal pension rights for self-employed taxpayers.

I would guess you are going to treat them as RDP's anyway. I would! Half the California wages are taxed to the NJ partner on the separate federal return. You will probably want joint returns for each state. Report total income on each regardless of where it was earned.

[Max W]

Unless they are RDP's (REGISTERED domestic partners) in CA, file each as Single. End of problem.

[joanmcq]

NJ has very weird filing rules, you file a resident return for the part of the year you are a resident, and a non resident return for any NJ source income received while a non resident. If filing joint, all the spouse's NR income is considered resident. So my solution to that would be to file separate which is allowed if the spouse is not a resident for the whole year. Then I file an NR to report the house sale. CA I can file joint and exclude the earnings in NJ before the move. NJ confers the full benefits of marriage on civil union partners from what I've read. I'm going to post on the LGBT tax list serve, but you're right, I'd do it anyways.

[joanmcq]

Unless they are RDP's (REGISTERED domestic partners) in CA, file each as Single. End of problem.

Or substantially similar. CA started recognizing out of state marriages & DPs years ago.