Divorce proceedings are complicated enough without factoring in your tax return. However, it’s vital to consider how your taxes play into the financial parts of your divorce, especially in the matters of alimony. Mark Witecki, CPA provides accounting services to sort out divorce tax issues and make sure that you are in a sound place financially for upcoming tax seasons.
Determining Alimony and Tax Obligations
Before you know what you can do on your tax return regarding payments made to your spouse or former partner, it’s important to note that alimony is clearly defined. Alimony consists of structured payments established as a result of a divorce or separation agreement and can include payments for temporary support. Casual provision of money to a spouse, without one of these agreements in place, is not alimony and is not tax deductible. Child support and income received from selling off assets are not qualified as alimony either.
Taxes on alimony are standardized by the IRS and there are tax implications on both sides. If you are the person providing the payments under an established payment plan, your money is tax deductible. If you are receiving alimony, this is considered income and is subject to taxation. During your consultation for divorce tax filing, Mark determines the type of alimony you’re paying or receiving and strategizes for the most ideal way to prepare tax documents.
Limiting Tax Liability in Divorce Proceedings
Mark’s calculates the amount of alimony you are responsible for on your tax return, with special consideration paid to dependency, filing status, and accurate alimony amounts. If you are receiving alimony payments and not reporting them as income on your tax return, you could be at-risk for negative attention from the IRS.
Mark D Witecki CPA CFP® CFE® EA CCFS® CDFA® works closely with divorced or legally separeted tax payers to minimize liability based on timing and amounts of alimony. In determining optimal amounts, deductions on alimony paid can be maximized and taxes paid in alimony income can be minimized. Mark works with clients on either side of alimony arrangements for ideal tax strategy. During this process, Mark makes sure that the steps have been completed to support compliance, such as exchanging social security numbers with your ex or soon-to-be ex spouse to avoid penalties and issues with successful deductions.
In addition to tax planning for traditional alimony payments, Mark works on tax strategies and filings for clients who entered into a lump sum agreement for alimony or those who have arranged for an Alimony and Maintenance Trust.
Ask Mark Witecki CPA about Divorce Tax Services
Mark D Witecki CPA CFP® CFE® EA CCFS® CDFA® service individual tax payers to support minimized liability and maximized deductions. To learn more about tax planning and filing after divorce and alimony, contact Mark today for your consultation.