Tax/Legal Q&A

Source: SkyNet (United's Intranet)

Before enrolling, are there potential legal issues to consider?

You may want to consult with an attorney before formally registering your relationship. There may be legally enforceable obligations entered into when you sign a domestic partner affidavit or governmental registration form. These obligations may apply even after a relationship is ended.

Why am I subject to additional taxes because my domestic partner is enrolled for my benefits?

The Internal Revenue Code does not recognize a domestic partner relationship in the same way as it does a marriage for tax purposes. While your domestic partner is eligible to receive benefits, the fair market value of the benefits is reported as additional income to you and is taxed accordingly. For medical and dental benefits, a monthly premium amount is added to your income. For travel benefits, the difference between the service charge and the companion fare for a segment will be added to your income. This is considered as non-cash, or imputed income, that is added to your other income and taxed accordingly. Your net paycheck will be less than it would be without the imputed income since the imputed income is subject to applicable income tax withholding and FICA taxes. Other benefits are also subject to imputed income such as company provided life insurance. Your Form W-2 will include total imputed income along with other compensation in box 1. Some imputed income examples are available on the domestic partner SkyNet site.

My qualified domestic partner is also a United employee. Will this have any impact on how we use our benefits?

Since your domestic partner is also an employee, and employees can receive tax-free benefits, no additional income (imputed income) will be reported to you, with one exception. The company provides Dependent Life Insurance coverage for an employee's dependents and this will be reported as additional income, just as it currently is with a spouse.

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