Document Type

Article

Publication Date

2010

Abstract

Many employers provide domestic partner benefits to their employees, especially in the form of health care plans. Domestic partners are not considered spouses under the Internal Revenue Code. Nor, of course, are same-sex spouses so long as DOMA is in effect. Many employers assume that this means all domestic partner (or same-sex spouse) benefits are taxable under the federal tax law. But this is not true. A partner (or same-sex spouse) can qualify as a dependent and benefits paid to dependents are also tax-exempt. A person can qualify as a dependent for purposes of excluding the value of health care plans from income even if the person cannot be claimed as a dependent on the employee taxpayer’s return. This essay describes the applicable rules in some detail. It also provides a survey of colleges and universities that provide such benefits and analyzes how many of such employers are applying the wrong tax law to their employees.

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