An employer can provide certain benefits to its employees on a tax-exempt basis. Those benefits can also be extended to spouses and dependents of those employees on the same tax-exempt basis. The domestic partner benefit is federally taxable because the federal tax code does not recognize a domestic partner in the same manner as a spouse, and it does not automatically recognize a domestic partner benefit as a taxable dependent to you and withhold federal, Social Security, and Medicare taxes on its value unless you provide a certification that your domestic partner meets the federal tax code criteria for a dependent.
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