Divorce Tax – Killer Information On IRS Issues
Divorce Tax Issues – What You May Experience
Just as with many other things in life, divorce can also affect your taxes. When it comes to divorce, you should not let your emotions take over. Divorce tax issues are some of the most common tax issues that people in the US face. You need to consider your CPA’S advice on how to file your return. Community property states will treat certain issues differently than other states. There are basis of property issues, transfers between spouses, etc. to consider.
Innocent Spouse’s tax liability: An important divorce tax issue.
If you qualify for “innocent spouse”, then you may not be liable for paying the entire amount that you jointly owe. You may only have to pay a portion, or none of the balance that is due. Most married couples file their returns jointly. However, at the time you seek divorce, you may not want to pay your husband’s taxes, especially if you didn’t benefit from the income. It is very hard to win the IRS over to your way of thinking. Please see the section on innocent spouse under the “free advice” tab above,
Some Other Common Divorce Tax Issues:
Issue 1- You are getting divorced and you are wondering whether you still have to pay all of the taxes on your joint return, Even if you didn’t benefit from the money, such as in the case of under reported income, you are still liable for 100% of the tax. The Internal Revenue Service seeks to collect the balance that is due from any one of the parties. But if you qualify for “innocent spouse”, then you will not have to pay the additional tax that is due.
Issue 2- One of the many divorce tax issues that most people face is whether they should inform the IRS that they are getting divorced. There is no need to. If you file married filing separate, then the IRS will know. If money is owed from previously filed years as married filing joint, then when resolving the liability, you will report your status on the 433a form you fill out.
Issue 3- If you are wondering whether or not you can deduct legal expenses incurred on your divorce, then the answer is no. You cannot deduct these expenses. Legal expenses relating to property and taxes are deductible. Have your attorney give you a separate accounting. Expenses for the collection of alimony is deductible, as alimony is taxable.
Issue 4- Before you finalize your divorce, it is advised that you get your joint credit report from the major three credit reporting agencies; even if you completely trust your spouse. Many people may get into debt without the knowledge of their spouse. Credit issues come into play when considering a joint payment plan for any delinquent balance, as well as qualifying for innocent spouse.
If you are concerned about the tax issues in your divorce, which you should be, please don’t hesitate to contact us at 713-774-4467.
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