CHAPTER 11DIVORCE TAX- NO SHELTER FOR THE .ppt

1、CHAPTER 11 DIVORCE & TAX: NO SHELTER FOR THE WEARY,Tax Ramifications of Divorce and Separation What the IRS does Susan Learns a Tax Tip Tax ramifications of alimony v. child support How to Research a Tax Tip Internal Revenue Code Section 71(b),Divorce & Tax: No Shelter for the Weary,Chapter 11,The S

2、ix IRS Must Haves Payment must be in cash Cash must be paid directly to the payee Payments are allowable as a deduction if permitted under a written and signed agreement Payments considered Tax deductible if not living to together Non-Tax deductible if living together Differentiate between support p

3、ayments and property settlement Payments cannot be disguised as child support,Divorce & Tax: No Shelter for the Weary,Chapter 11,Attempting to Disguise Child Support Child support is not tax deductible Alimony and spousal support is tax deductible Reduction in alimony The Recapture Rule Tax Conseque

4、nces of Transferring Property Transferring property How capital gains tax works,Divorce & Tax: No Shelter for the Weary,Chapter 11,Transferring Property to a Third Party Beneficiary spouse The IRSs three requirements: Transfer is made pursuant to a divorce or separation agreement Transfer is made pu

5、rsuant to a written request of the beneficiary spouse Transferring spouse receives a written acceptance of the property transfer after the property has been transferred,Divorce & Tax: No Shelter for the Weary,Chapter 11,Retirement Plans and Property Settlements Some types of retirement plans Pension

6、s Individual retirement plans Profit sharing Keogh plans 401K plans 403B plans Understanding Qualified Domestic Relations Orders Purpose of a QDRO,Divorce & Tax: No Shelter for the Weary,Chapter 11,Steps to Take When Seeking Retirement Benefits for an Alternate Payee Get the plans instructions befor

7、e having the Judge sign the order Preparing a Qualified Domestic Relations Order Review the example (Exhibit 13:1),Divorce & Tax: No Shelter for the Weary,Chapter 11,Which Spouse is taking the Dependency Exemptions? Dependent exemption Who is entitled to receive the benefit?What needs to be signed i

8、f the other parent is permitted to take the deduction? IRS Form 8332 Are Legal Fees Tax Deductible? Legal fees in connection with a divorce or separation are not deductible Tax advice is tax deductible,Divorce & Tax: No Shelter for the Weary,Chapter 11,Whos Head of the Household Now? Head of Househo

9、ld Person who pays for over half of the costs for maintaining a household without children Three step test if children are involved: Claiming spouse must provide over half the costs of maintaining the household The house must have been the childrens main residence during the tax year The former spou

10、se could not have lived in the household during the last six months of the tax year,Divorce & Tax: No Shelter for the Weary,Chapter 11,Tax Ramifications of Selling the Marital Home Capital gains taxes One Option is Filing Separately Married, filing separately Higher tax bracket Review Tax Clauses (Exhibit 13:2) Does Declaring Bankruptcy End a Support Obligation?,Divorce & Tax: No Shelter for the Weary,Chapter 11,Ethics Alert: Do e-mails automatically convey client status?,Divorce & Tax: No Shelter for the Weary,Chapter 11,