In my opinion, divorce should not be the first consideration and certainly not a threat tool for shaping a marriage. I do not know of anything that can be more disturbing, hurtful, or fearful than divorce. And when divorce is the last resort, most families regret the fallout that follows. But since there are some people who must tolerate abuse (physical or mental), unfaithfulness, or lack of love and respect, divorce may be the only pressure release available. I am always sympathetic with the children in the divorced family. Having no input or consideration in the decision to divorce; they may suffer more that their parents. Additionally, upsetting can be the tax aspects of divorce. Taxpayers who are divorcing or recently divorced need to consider the impact divorce or separation may have on their taxes. According to Tax Tip 2017-23 alimony payments paid under a divorce or separation instrument are de- ductible by the payer, and the recipient must include it in income. Name or address changes and individual retirement account deductions are other items to consider. www. IRS.gov has resources that can help along with these key tax tips:
Child Support Payments are not Alimony. Child support payments are neither deductible nor taxable income for either parent.
Deduct Alimony Paid. Tax- payers can deduct alimony paid under a divorce or separation decree, whether or not they itemize deductions on their return. Taxpayers must file Form 1040; enter the amount of alimony paid and their former spouse’s Social Security number or Individual Taxpayer Identification Number.
Report Alimony Received. Taxpayers should report alimony received as income on Form 1040 in the year received. Alimony is not subject to tax withholding so it may be necessary to increase the tax paid during the year to avoid a penalty. To do this, it is possible to make estimated tax payments or increase the amount of tax withheld from wages.
IRA Considerations. A final decree of divorce or separate maintenance agreement by the end of the tax year means taxpayers can’t deduct contributions made to a former spouse’s traditional IRA. They can only deduct contributions made to their own traditional IRA. For more information about IRAs, see Publications 590-A and 590-B.
Report Name Changes. Notify the Social Security Administra-tion (SSA) of any name changes after a divorce. Go to www. SSA.gov for more information on this subject. The name on a tax return must match SSA records. A name mismatch can cause problems in the processing of a return and may delay a refund. For more on this topic, see Publication 504, Divorced or Separated Individuals. Get it on IRS.gov/forms at any time.
A word to the wise, from someone who knows the heartache that attends divorce; please make divorce the last resort. Counseling, prayer, and spiritual endeavors must precede the possibility of divorce. Usually, it is far better to reconcile than to divorce, especially, where children are involved.
Word up! Avoid scams. The IRS does not initiate contact using social media or text message. The first contact normally comes in the mail. Those wondering if they owe money to the IRS can view their tax account information on IRS.gov to find out.
For more information, call Wilson & Wilson, PC, CPA, CFE at 615-673-1330 or email jim@ wilsonandwilsoncpa.com