LEGAL ALERT: New Tax Proposal Will Eliminate Spousal Support Deduction in 2018!

Alert! Key Legal Update

SPOUSAL SUPPORT LEGAL ALERT

The Implications Of The New Tax Proposal On Your Divorce. Provision In New Tax Would Eliminate Spousal Support Deduction.

This could be a BIG deal in your divorce case! Are you planning on continuing your divorce case into next year?  Are you perhaps in a position to complete it in 2017? The new tax proposal recently unveiled may make you think twice.

The Tax Cuts and Jobs Act contains a provision that would effectively eliminate the deduction that tax payers receive for making spousal support payments. Click here to read the full text of the proposed Act.

As the law currently reads (and has for around 75 years) , the person paying the support is allowed to deduct the amount, while the person being paid is required to claim it as income and thus, pay taxes.

When determining spousal support, courts take into account the fact that the paying spouse is able to deduct the amount of spousal support paid on his or her taxes.… View Full Article → “LEGAL ALERT: New Tax Proposal Will Eliminate Spousal Support Deduction in 2018!”

FRAUD ALERT: Avoid Tax Return Scams!

Fraudulent tax return preparers are back!

Tips On How To Avoid Fraudulent Tax Preparers

With this being tax season, the Federal Justice Department urges the public to look out for and avoid fraudulent tax preparers who illegally swindle both their clients and the federal treasury.  Below are some tips that may seem obvious and others that may not seem so obvious.

  1. Look for a PTIN.  The IRS requires that all paid tax preparers register with the IRS and obtain a preparer tax identification number (PTIN).
  2. Never allow your refund to be deposited directly into a tax preparer’s bank account.  Courts have barred such a practice.
  3. Never sign a blank return or a return without fully reading it from beginning to end first.
  4. Never allow your tax preparer to mischaracterize expenses.  By this, I mean that you should never allow personal purchases to be wrongly characterized as deductible expenses.
  5. Never allow your tax preparer to fabricate expenses or deductions.  
… View Full Article → “FRAUD ALERT: Avoid Tax Return Scams!”

Gay Marriage Alert: The IRS Finalizes Rules Recognizing Same-Sex Marriages

Tax Returns To Be Amended By IRS To Reflect Same-Sex Marital Status Changes

In 2013, in United States v, Windsor, the U.S. Supreme Court found Section 3 of the Defense of Marriage Act to be unconstitutional.   Section 3 defined “marriage” as a legal union between one man and one woman and “spouse” as only a person of the opposite sex who is a husband or a wife.  The Court’s decision meant that married same-sex couples must be treated under federal law as married opposite-sex couples.

The IRS followed up with Revenue Ruling 2013-17.  The IRS concluded that, for federal tax purposes, the terms ” husband and wife”, “Husband” and “wife” should be interpreted to include same-sex spouses.  The IRS further concluded that, for federal tax purposes, recognition should be given to a same-sex marriage that was valid in the state where it was entered into, regardless of the married couple’s place of domicile.… View Full Article → “Gay Marriage Alert: The IRS Finalizes Rules Recognizing Same-Sex Marriages”

Tax Deduction: Divorce Legal Fees

Are Your Legal Fees From your Divorce Tax Deductible? Tax Deduction Often Overlooked!

Generally speaking, the IRS does not allow a write-off for court costs and legal fees stemming from a divorce.  It does, however, offer deductions for any portions of those fees related to tax advice and alimony.

What Fees Can Be Considered Tax Deductable During A Divorce?

According to the IRS, legal fees that are specifically spent to collect spousal support can be included under “other expenses” with the itemized deductions listed on Schedule A of tax form 1040.  This write-off is also available for any proceeding in which a spouse is attempting to collect taxable spousal support, increase the amount of support, or collect any past due amount. It is important to note, however, that the IRS does not allow a deduction for the cost of trying to collect non-taxable income during divorce, such as overdue child support or temporary spousal support.  … View Full Article → “Tax Deduction: Divorce Legal Fees”

Tax Tips for 2015

What You Can Do To Minimize Your Tax Burden For 2015

It’s now the time of year to consider what you can do to minimize your tax burden for 2015. Following are some of the tax tips you may want to consider to reduce the amount due to Uncle Sam next April.

  1. Make your charitable deductions before the end of year.  Generally, you can deduct charitable contributions up to fifty percent of your adjusted gross income.  Get rid of those unused items and receive a tax deduction.
  2. Remember that you can gift up to $14,000 per year to each individual with it being exempt from any gift tax reporting requirements to the IRS (or actual gift tax if you have exhausted all of your lifetime gift tax exemption).  If you are planning to make any large gifts, at least make a gift of $14,000 before the end of December to take advantage of this gift tax exemption.
… View Full Article → “Tax Tips for 2015”

Divorce and Your Mortgage Interest Tax Deduction

Consider Allocation Of Mortgage Interest Tax Deduction When Filing A Divorce Decree

In Ohio, and elsewhere, you may be able to deduct the interest paid on the mortgage on your principle residence when filing your tax return.   A deduction is simply the lowering of your taxable income.  For example, if you make an adjusted gross income of 70,000 dollars and have paid 10,000 dollars in mortgage interest throughout the year, you’re taxable income before other deductions would be 60,000 dollars.

Regardless of whether you’re single or married, you’re able to claim your mortgage interest deduction on your itemized return.  When you file your return, you’re also required to list your filing marital status.  The IRS requires that you claim your marital status in accordance with your marital status on the “last day of the year.”  So you must have been married on December 31st of the year to file as “married” for that year.… View Full Article → “Divorce and Your Mortgage Interest Tax Deduction”