Tax Deduction: Divorce Legal Fees

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

tax deduction divorceGenerally 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.  In addition, it does not allow for the deduction of any of your spouse’s legal fees that you may be ordered to pay.  What it does allow for is a write-off for any research and time spent on tax-related subjects such as real … Read More... “Tax Deduction: Divorce Legal Fees”

Tax Tips for 2015

What You Can Do To Minimize Your Tax Burden For 2015

tax tipsIt’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.
  3. Go to the doctor.  If you itemize your deductions and have enough medical expenses (10 percent of AGI for most individuals), you can deduct these expenses.  If you need new eyeglasses, hearing aids, etc., now is the time to do it.
  4. Prepay.  You
… Read More... “Tax Tips for 2015”

Divorce and Your Mortgage Interest Tax Deduction

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

divorce mortgage interest tax deductionIn 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.

There are two types of deduction schedules you’re able to file, an itemized or a standard deduction.  It only makes sense to file an itemized deduction only if your deductions exceed your standard allowance, which in 2013 reached $6,100 for an individual filing as a … Read More... “Divorce and Your Mortgage Interest Tax Deduction”

Tax: Effects of the “Fiscal Cliff” Legislation

Compromise Reached, But How Does It Effect Tax Planning For 2013?

tax

In December, 2012, we addressed the looming “fiscal cliff” tax ramifications and potential last-minute tax planning.  With legislation finally passed in late December, in order to prevent widespread tax increases and steep spending cuts, it is a good time to look at the highlights of the legislation and how it affects taxpayers.

  1. Income tax rates.  A compromise was reached on income tax rates.  Although neither side attained its goals, tax cuts were extended on incomes up to $400,000 for individuals and $450,000 for couples.  Earnings above that are taxed at 39.6%, up from 35%.  Many liberals and conservatives were unhappy with this compromise that extends the tax cuts for most taxpayers.  Unless new legislation is passed, this extension is permanent.
  2. Estate taxes.  The federal estate tax exemption remains at $5 million (adjusted for inflation) and up to $10 million for family estates.  Without legislation, the exemption was set to return to $1 million for 2013.  The top estate tax rate is set at 40%, up from 35%.  This change is permanent.
  3. Capital gains and dividends.  Capital gains tax rates were returned to those during the Clinton administration.  Capital gains
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Tax Planning: Year End Alert for 2012

Financial Cliff Poses Several Strategies To Consider For End Of Year Tax Planning

tax planningThe end of the year is always a good time to speak with your financial advisor and discuss any potential last minute tax planning that may be appropriate before the new year begins.  This year is extremely unusual due to the tax cuts set to expire at the end of the year as well as federal programs that are to be cut.  Beginning next year, federal income tax rates are set to increase and the capital gains and dividend tax rates are also set to increase.  The federal estate/gift exemption is set to revert back from $5,000,000 to $1,000,000.  This “fiscal cliff”, as it has come to be known, is set to commence January 1st of 2013 unless Congress and the President reach an agreement before then.  If one assumes that it is unlikely that an agreement will be reached before the end of the year, there are a number of strategies to consider.

Tax Planning Considerations

It is unlikely that anyone’s income tax rates will go down in 2013 and very possible that income tax rates will go up.  Therefore, the traditional strategy of deferring income … Read More... “Tax Planning: Year End Alert for 2012”

INNOCENT SPOUSE AND IRS

INNOCENT SPOUSE AND IRS

INNOCENT SPOUSE: AN INTRODUCTION

innocent spouseFinancial decisions in a marriage are not always a joint venture; wherein both Husband and Wife cooperate in the decision making. In the first few years of my own marriage, my Husband filed our taxes for us. I would check to ensure he put in all my information, but I never looked to see what numbers he was putting into his part of the tax return. Now that I am an attorney practicing in divorce, I know the detrimental effects that can occur in these situations.

Sometimes the spouse in charge of the finances may make misrepresentations to the Internal Revenue Service (IRS) or they may not file a tax return at all. Even though only one spouse may be in charge of the finances, both Husband and Wife will be jointly and severally liable for any unpaid taxes, fees, interest, and penalties, even if you are the innocent spouse. When getting married, we put a lot of trust and faith in our spouse to do what is right, what is correct, and what is honest; but if something is done with your name attached, I urge you to be just as … Read More... “INNOCENT SPOUSE AND IRS”

Social Security ALERT: No More Annual Earnings Statements

Social Security Annual Earning Statements Eliminated

social security alert annual earnings statementsIf you look forward to receiving your social security yearly earnings statements in the mail and you had a birthday last summer, you may have wondered why you did not receive your statement.  Effective April 1st of 2011, in a cost cutting move, the Social Security Administration ceased mailing the yearly statements.  The elimination of the
statements, mailed to 150 million people a year, will save $70 million a year.  However, this savings also comes with a cost.

What are the costs with eliminating annual social security earning statements?

These annual earnings statements are an invaluable tool that helps millions of Americans plan for their retirement. These four-page statements, which had been sent to all Americans over age 25,  provide a detailed record of each individual’s earnings record, an estimate of their expected retirement benefit, the approximate amount they will receive each month if the worker becomes disabled, and how much a worker’s family will receive if the worker dies in the coming year. They also allow workers to check for any errors in their recorded earnings and taxes paid.  Finally, it was a tangible document that gave people confidence in the social security … Read More... “Social Security ALERT: No More Annual Earnings Statements”

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