Understanding Civil Union Partners and Their Tax Impact
A civil union partner refers to a person who has entered into a legal partnership recognized by certain U.S. states, granting rights and responsibilities similar to marriage. However, unlike marriage, civil unions are not recognized by the federal government or the IRS, resulting in different tax rules and benefits. This distinction creates important tax filing considerations for couples in civil unions.
Civil Unions Versus Marriage: Legal and Tax Distinctions
Civil unions were introduced primarily as a way for same-sex couples, and in some cases opposite-sex couples, to gain legal recognition and state-level protections before the nationwide legalization of same-sex marriage in 2015. Unlike marriage, which is universally recognized by all states and the federal government, civil unions typically are recognized only by the states that have specifically authorized them.
For example, Vermont was the first state to legalize civil unions in 2000, followed by states like Colorado, New Jersey, and others. While these states may grant civil union partners some rights similar to married couples — such as healthcare decision-making or inheritance rights at the state level — the federal government does not extend spousal tax benefits to civil union partners.
Federal Tax Treatment of Civil Union Partners
The IRS recognizes only legally married couples for federal tax purposes. Therefore, individuals in a civil union:
- Must file federal tax returns as single taxpayers or, if eligible, as head of household.
- Cannot file joint federal tax returns because civil unions are not federally recognized marriages.
- Are ineligible for federal tax benefits tied to marital status, such as the earned income tax credit (EITC) for married couples, or filing jointly.
This means civil union partners must navigate tax filing individually at the federal level.
State Tax Treatment Can Vary Significantly
Many states that recognize civil unions may allow partners to file state tax returns jointly or claim certain state tax benefits similar to those married couples receive. However, these rules vary widely by state:
- Colorado, for example, permits civil union partners to file joint state tax returns.
- New Jersey offers similar filing options and tax rights for civil union partners.
- Other states with no civil union recognition treat partners as single taxpayers for state tax purposes.
It’s crucial for civil union partners to review their state’s tax rules carefully or consult a tax professional to maximize benefits and ensure compliance.
Practical Example
Consider a couple in a civil union residing in Colorado. For federal taxes, each must file individually as single taxpayers. Yet, for Colorado state income tax, they may file jointly, potentially lowering their state tax liability. Conversely, if the couple moves to a state not recognizing civil unions, they would lose the ability to file jointly at the state level.
Who Should Be Aware of These Rules?
- Couples in civil unions, especially in states recognizing such unions.
- Same-sex and opposite-sex partners who have opted for civil unions instead of marriage.
- Taxpayers relocating between states with different recognition policies.
Important Tips for Civil Union Partners
- Verify your state’s current laws regarding civil unions and tax filing.
- Maintain documentation of your civil union status for tax and legal purposes.
- Consult a tax professional to navigate differences between federal and state tax rules.
- Benefit from state-level filing options if available, but never assume federal benefits apply.
Common Misunderstandings to Avoid
- Joint federal filing: Civil union partners cannot file joint federal tax returns.
- Federal benefits: Civil unions do not qualify partners for federal tax credits or deductions available to married couples.
- State tax benefits: Some states may offer tax advantages; ignoring these can lead to missed opportunities.
- Civil unions vs. domestic partnerships: These are distinct legal arrangements with varying rights and tax implications.
Frequently Asked Questions
Can civil union partners file joint federal tax returns?
No. Only couples legally married under federal law can file jointly.
Do civil union partners receive federal marriage tax benefits?
No, federal tax benefits tied to marriage do not apply to civil union partners.
What happens if a civil union couple moves to a state that does not recognize civil unions?
They may lose state-level tax benefits and recognition of their partnership.
Are civil unions the same as domestic partnerships?
No, civil unions generally grant broader legal rights than domestic partnerships, but specifics vary by state.
Summary Table: Civil Union Partner Tax Implications
| Aspect | Federal Tax Law | State Tax Law (Varies by State) |
|---|---|---|
| Recognition | No | Often yes (depends on state) |
| Filing Status | Single | Joint or single depending on state |
| Access to Tax Credits | No | Possible at state level |
| Social Security Benefits | No | No |
| Inheritance & Property Tax | Varies by state | Often recognized |
References
- IRS, “Same-Sex Marriage and the IRS,” irs.gov/newsroom/same-sex-marriage-and-the-irs
- National Conference of State Legislatures, “Civil Unions and Domestic Partnerships,” ncsl.org
- Colorado Department of Revenue, “Civil Unions,” colorado.gov
For more information on filing status, see our article on Filing Status for Tax.
Understanding the distinction between civil unions and marriage helps taxpayers accurately file taxes and optimize state-level benefits without risking non-compliance with federal tax laws.