North Carolina Divorce Lawyers Blog

Articles Tagged with IRS

Published on:

By

North Carolina spouses who file federal taxes jointly are typically liable for the taxes that are due when they file. This may create issues and complications in a number of scenarios, but there is an exception to this rule if one spouse seeks to be relieved from liability.

Requesting equitable relief under the Internal Revenue Code can be challenging because taxpayers must meet specific conditions to be eligible.

LaRosa v. Commissioner of Internal Revenue

Continue reading →
Published on:

By

For spouses and ex-spouses facing economic hardship and seeking equitable relief from joint and several tax liability, filing a request for relief under federal law may be an option. The Internal Revenue Code (I.R.C.) provides an exception to the usual rule that spouses are liable for each other’s tax debt and liabilities, but filers must provide convincing evidence that they are facing an economic hardship if they choose that route for relief.

Thomas v. Commissioner of Internal Revenue

In the case of Thomas v. Commissioner of Internal Revenue, Thomas requested relief from underpayments for three years of tax returns based on her assertion that she was facing an economic hardship. Thomas sought liability relief for tax underpayments discovered by the Internal Revenue Service (IRS) for tax years 2012 through 2014, but Commissioner denied the request. When the issue went before the United States Tax Court, the Court denied Thomas’ request for equitable relief based on economic hardship under Internal Revenue Code Section 6015(f) because she had significant assets and did not prove hardship based on her income.

Continue reading →
Published on:

By

Which filing status is the best option for you on your federal income tax return this year? More than one may apply, such as deciding with your spouse whether to file jointly or separately, but if you plan on filing as head of household, you must be sure you meet the requirements. Continue reading →

Published on:

By

Members of some religious groups can submit a request to be exempt from the Social Security tax, but this choice may limit the tax credits you can claim on your federal return. For example, in order to claim a child tax credit, your child must have a Social Security number. A child who has an individual taxpayer identification number (ITIN) will not qualify. Continue reading →

Published on:

By

The financial impact of a divorce is often one of the longest-lasting challenges that families will face. Divorces can be expensive, even without the changes in household income and bills. This is especially true for divorced couples with children. The way divorced parents approach filing their taxes each year is another financial consideration they must keep in mind. Continue reading →

Published on:

By

The American Rescue Plan Act of 2021 (hereinafter “Plan”), also called the COVID-19 Stimulus Package, was passed by Congress and officially signed into law by President Joe Biden on March 11, 2021.  The Plan seeks to aid the economy in recovering from the effects of the COVID-19 pandemic. One significant change the Plan provides for is a new federal enhanced child tax credit beginning July 15, 2021. Statistics show that the credit will go to roughly 39 million households with about 65 million children. For the 2021 tax year, the enhanced maximum child tax credit is $3,600 for children younger than age six (6) and $3,000 for children between the ages of six (6) and seventeen (17).

Continue reading →

Published on:

Carolyn Woodruff, J.D., C.P.A, C.V.A.
By

Dear Carolyn:

My ex and I share the children fifty-fifty.  We have three children.  I make approximately $25,000 more than the other parent.  I pay child support even though I have them half the time.  Our child support order says nothing about who gets the dependency exemptions, and I get in a fight with my ex every year over the dependency exemptions.  Who should get the three dependency exemptions?

Continue reading →

Published on:

By

Dear Carolyn,

It is tax time.  I am divorced and have two children.  I pay $2000 per month in child support, and my ex (the mother) doesn’t even work.  She will not give me the dependency exemptions for the children.  The judge didn’t give them to me either.  They live with her and I visit every other weekend and half the holidays.  I am paying for the children, so why can’t I have the tax benefit?

Perturbed

Continue reading →
Published on:

Carolyn Woodruff, J.D., C.P.A, C.V.A.
By

Forget it!

Forget about the alimony deduction for all new decrees or instruments post-2019. (See Part I for modification of pre-2019 alimony orders and agreement, as modification has a separate set of rules.) The deduction is gone absent a congressional miracle. That means on December 31, 2018, or before you must have alimony that qualifies under IRC Section 71 before it is repealed. The alimony must meet the terms of Section 71, pre-TCJA and pre-2019, which are as follows: Continue reading →

Published on:

Carolyn Woodruff, J.D., C.P.A, C.V.A.
By

Previously, we examined the paragraph and subparagraphs defining “divorce or separation instruments.” Now let’s take a look at which sections of TCJA incorporate these subparagraphs.

Continue reading →