TAXES & DIVORCE
COMMON SCENARIOS INVOLVING TAXES AND SPOUSAL SUPPORT
One of the many tax complications you may face after divorce occurs when you end up in a different tax bracket than usual. For example, if you receive alimony, you may be in a tax bracket for people with higher income, so you can expect your taxes to change. On the other hand, if you pay alimony, your tax responsibilities may actually be decreased.
In fact, you will receive a deduction based on the amount you pay, while you will have to declare the alimony and pay additional taxes on it if you receive payments. If you are confused about what your tax responsibilities will be, you should talk to Brian D. Perskin & Associates P.C. since we have answered countless questions about taxes and divorce.
If you receive child support, you may be relieved to know this does not count as income, so you will not need to declare taxes on it. However, if you pay child support, you will not get any deductions. In this way, it may be more beneficial to you to pay more alimony and less child support. Though there are rules regarding this that we will not break, we can carefully explain how to pay the same amount in benefits to your former spouse while paying less in taxes due to deductions. In this way, you may end up paying less overall.
We also feel it is important to remind you that simply paying cash to your former spouse does not count as alimony or child support in the eyes of the court. If you want any tax benefits, there needs to be a court order for spousal support.
OTHER TAX COMPLICATIONS
Since divorce involves the transfer of many expensive assets, you may wonder how that affects your taxes. You should first know that you will not have to pay additional taxes when you sign property over to your former spouse. However, there are exceptions to this at times, so you should let us know if you are worried about taxes and assets.
If you are expecting a refund check from your taxes last year, when you were still married, you will need to split the money with your ex unless you work something out. This is because the IRS will write the check to both of you, and neither one can cash it without the other’s signature. If your ex is refusing to share the money with you, or is claiming he or she never got it when the IRS claims otherwise, you need to let us know.
IN TROUBLE WITH THE IRS?
You may have an idea of how to handle most of the common tax complications by now, but it can be difficult to know what to do when you find out your former spouse did something wrong according to the IRS. If you were not there to help fill out the tax forms, you may be protected by the Innocent Spouse Rule.
In fact, even if you had to sign the forms, but were not shown them in their entirety so you could look them over, you may qualify for the Innocent Spouse Rule. Of course, if your former spouse signed your name without you knowing, you should also be protected by this rule. This means you will not be penalized for the taxes being inaccurate when you had nothing to do with them, despite your name being on the forms.
Of course, there are some limits to this rule, so you need to be experiencing one of a few scenarios. For example, if your spouse neglected to report all income, and therefore owes more than he or she paid, this rule would likely kick in since you have no way of knowing for sure whether he or she reported all income. The same goes if your former spouse claimed deductions that he or she did not actually qualify for.
In addition, you need to agree that you did not know about the inaccuracies when you signed the forms. Otherwise, you will not qualify for the Innocent Spouse Rule. If you think you do, though, you need to file for this exemption as soon as possible so that you are not held responsible. The IRS typically understands that couples that are separated or divorced should not always be penalized for the mistakes of one spouse since it is not always possible to know what your ex is doing.
LET US HELP YOU AVOID SEVERE PENALTIES
You deserve to be protected from mistakes made by your former spouse. We can let you know if we think you qualify for the Innocent Spouse Rule, and if so, we can help you file with the IRS. If you simply let your former spouse’s mistakes ruin your own financial situation, you could be damaging your future and unfairly penalizing your children. If you want to make sure you do not owe money or face other penalties when it comes to taxes, call Brian D. Perskin & Associates P.C. so we can take a look at your situation.