Why are my domestic partners benefits taxed and my married colleagues benefits aren ?
The Internal Revenue Service has ruled that domestic partners cannot be considered spouses for tax purposes. Thus, employers are obligated to report the fair market value of the domestic partner coverage as income to the employee. The employee must pay income tax on that money. Domestic partner benefits may be considered non-taxable only if the domestic partner meets the IRS definition of a “dependent.” Internal Revenue Code Section 152 defines a dependent as someone who resides in the employee’s household and who receives at least half of his or her support from the employee.
