Yes, if you can claim your domestic partner as a dependent or you could have claimed your domestic partner as a dependent if not for the gross income test: He or she received gross income of
$4,050 or more in 2016.
(Note: See info on Imputed Income below.)
Here are the rules to claim a "Qualifying Relative" (Don't worry
about the word "relative".
That can be any unrelated person who passes the following tests
concerning residency, income, support and status.)
• Do they live with you? Your relative must live at your residence all year or be on list of Relatives who don’t have to live with you. About 30 types of relatives are on this list.
• Do they make less than $4,050 in 2016? Your relative cannot have a gross income of more than $4,050 in 2016 and be claimed by you as a dependent.
• Do you financially support them? You must provide more than half of your relative’s total support each year.
• Are you the only person claiming them? This means you can’t claim the same person twice, once as a qualifying relative and again as a qualifying child. It also means you can’t claim a relative—say a cousin—if someone else, such as his parents, also claim him.
Rules for all dependents:
• Are they a citizen or resident? The person must be a U.S. citizen, a U.S. national, a U.S. resident, or a resident of Canada or Mexico. Many people wonder if they can claim a foreign-exchange student who temporarily lives with them. The answer is maybe, but only if they meet this requirement.
• Are you the only person claiming them as a dependent? You can’t claim someone who takes a personal exemption for himself or claims another dependent on his own tax form.
Are they filing a joint return? You cannot claim someone who is married and files a joint tax return. Say you support your married teenaged son: If he files a joint return with his spouse, you can’t claim him as a dependent.
Imputed income in this instance refers to the employer paid
portion of the domestic partner medical coverage. If you add a dependent
to your health insurance coverage who does not qualify as a tax dependent under
the Internal Revenue Code Section 152 and Notice 2010-38, the Fair Market Value
(FMV) of the employer contribution toward that coverage is considered a taxable
fringe benefit, subject to tax withholding. This calculated fringe benefit is known
as imputed income. This fringe benefit will increase your taxable income.
Therefore, your federal, State, Social Security and Medicare taxes may increase
and your net pay will decrease. You are not paying taxes on the
same monies twice. Your employer is just accounting for the benefit you
are receiving from them as "income" to you.
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For example: Let's
say your normal weekly Gross Pay is $1,000 and your Net Pay after all deductions
is $700.
1. Normal Gross Pay $1,000
2. Non-taxed
Deductions: $100
3. Total Taxable
Income: Line 1 -minus- Line 2
=> $900
4. Value of
Employer Paid Insurance for Domestic Partner: $75
5. Total
NEW Taxable Income: Line 3 + Line 4 => $975
6. Taxes: $210
7. After Tax
Insurance Deduction: $75 (Insurance
Premium for DP)
8. Net Pay:
Line 5 -minus- Line 6 -minus- Line 7 => $690 (The decreased net pay is due to additional
tax owed on the value of the insurance premium.
Your taxes
are calculated against your Actual Wages (what
you are used to seeing) PLUS the Value of
the insurance your employer pays on your behalf.
As you can see,
you are not being double taxed, you are just being taxed on your regular wages
and the additional benefit you are now receiving.
The above example is generic and is not meant to account for any
specific W-2 scenario.
Health Insurance
premiums you paid would be considered a medical deduction regardless if he's
still your dependent or not.
You can include medical expenses you paid for an
individual that would have been your dependent except that:
- He or she received gross income of $4,050 or more in 2016,
- He or she filed a joint return for 2016, or.
- You, or your spouse if filing jointly, could be claimed as a
dependent on someone else's 2016 return.
