I am a retired school teacher and last year I became a registered domestic partner in California with my significant other, primarily so she could receive health care benefits under my plan. I was issued a Form 1099-Misc for $2,512, apparently the value of these benefits. Can she claim this income on her tax return since they are for her benefit (she is in a much lower tax bracket)?

ANSWER

The BIDaWIZ Team's Answer:

Even though the domestic partner benefits from the health-care, the benefit is directly tied to your past employment and the income generated thereof. This is why the benefit is taxable to you. However, California state allows you to claim a deduction for the health care benefits provided as an adjustment on Schedule CA (540 or 540NR). Unfortunately, this same deduction isn't available on your federal tax return.