Sue A. Bean is a CPA with more than 25 years of accounting experience and the president-elect of the Piedmont Chapter of the North Carolina Association of CPAs – to answer some common questions. She works with family law attorneys in analyzing financial information for divorce mediation and litigation. Her practice includes individual tax preparation, payroll services and small business consulting. She can be reached at email@example.com.
Can the transfer of property be used to satisfy an alimony requirement?
Alimony payments must be in cash. Neither the transfer of property from one spouse to another nor the use of the payer’s property may be used to resolve alimony or a separation agreement payment
When does taxation on alimony begin?
Alimony paid is tax deductible by the payer and includable as income for the recipient only when the parties do not live in the same household. You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment.
Can other payments made to payee be counted as alimony for taxation purposes?
Payments for child support and other child-related payments are not considered alimony. Non cash property settlements and payments to keep up the property may be considered as alimony payments.
What is Innocent Spouse tax relief?
Technically both parties are responsible for unpaid tax liabilities even after a divorce has occurred. However there may be relief for individuals who filed a joint return but later learned of a tax liability for which they believe only their spouse or former spouse should be held liable. Discuss your specific circumstances with your tax preparer prior to requesting this relief from the IRS.
My recommendation to all couples is to have equal knowledge of your joint tax returns. Before you sign the return look it over thoroughly and discuss any questions with your partner. You don’t want to find yourself being the “innocent spouse.”
The following are questions that should be discussed when filing joint income tax:
Does my spouse openly discuss his/her income?
Does my spouse avoid or discourage open communication regarding finances?
Do I know how much income my spouse earns monthly?
Does my self-employed spouse make regular tax contributions?
Is there unreported income?
LPL financial is not affiliated with Sue Bean
LPL Financial Consultants do not offer tax advice, therefore you should contact a professional tax advisor regarding your specific situation