The Intersection of Divorce and Taxes

By
Services for Real Estate Pros with Backoffice Squared

I represent taxpayers in Gainesville and the state of Florida who have tax issues with the IRS and Florida Department of Revenue. Divorcing couples have a whole host of problems to work out and many times the tax implications are way down the list of priorities. Sometimes these implications are not considered at all. Here are the most important tax aspects to consider for people who find themselves in this situation:

  1. If you are divorced on 12/31 – you cannot file a joint tax return for the year.
  2. If you are still married on 12/31 and do file a joint return – this cannot be undone by amending the return. You both will be jointly liable for the taxes.
  3. Transfers of property between spouses is not taxable. But beware, the tax attributes such as the basis for calculating gain or loss stay with the property.
  4. The rights to all or part of the benefits of a pension plan can be assigned to the non-owner spouse. This is done with a judgement, decree, or order that is known as a Qualified Domestic Relationship Order (QDRO). If there is any investment basis in the pension plan, it will be divided up.
  5. Alimony payments for divorce or separation agreements made after 12/31/18 are not taxable to the recipient and not deductible by the payor. Prior to this, it was the other way around. If you amend one of these earlier agreements in 2019 or later, it will fall under the new rules.
  6. Child support payments are not taxable to the recipient and not deductible by the payor.

There are a lot of little gotchas that can come out of divorce settlements. Ignoring the taxability of the various items can result in making the situation even worse.

If you or someone you know has received a Notice of Intent to Levy or some other federal or state tax issue, please feel free to contact me at either (352) 317-5692 or email jim@backoffice2.net.

 

Jim Payne, CPA

Backoffice2

Gainesville, FL

Cell (352) 317-5692

Office (352) 376-9401

Fax (352) 376-9440

jim@backoffice2.net

https://backoffice2.net

 

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Rainer
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Rose Mary Justice
Synergy Realty Pros - Dandridge, TN
Synergy Realty Pros

Divorced or divorcing couples should make sure they use a reputable CPA to do things right.  I can see how complications could arise from not following the rules. The last thing they need is trouble with the IRS.

Nov 06, 2019 04:53 AM #1
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Rainmaker
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Jim Payne, CPA

CPA firm practicing in the area of IRS Collections
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