North Carolina Divorce Lawyers Blog

Articles Tagged with tax

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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

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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.

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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 →

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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 →

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Any parent over the age of 18 whose rights have not been terminated has an obligation to financially support their children. If you are going through a divorce, have recently separated from your child’s other parent, or are involved in a child support matter for any other reason, it can be helpful to understand how support amounts are calculated.

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Dolan v. Dolan, 148 N.C. App. 256 (2002). 

  1. Facts: Plaintiff and Defendant married in 1971. Plaintiff went to optometry school and eventually he started his own practice and also bought rental properties to supplement the family income. The parties separated in 1994. A claim for Equitable Distribution (ED) was brought in a counterclaim by the Defendant. For ED, the parties entered into certain stipulations. They stipulated to the values of the rental properties. There were some contentions in the proposed order. However, the Judge signed an Order, which found that Plaintiff would incur certain amounts for taxes for the “liquidation” of rental properties distributed to him, if he decided to do so. The Order also found that Defendant would incur taxes for the liquidation of the rental properties distributed to her, if she decided to do so. Defendant appeals. 

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In a previous post, we discussed the basics and legal implications of smart contracts built upon blockchain technologies. These smart contracts are one of the highly touted tools that are set to streamline business. The recent law that formed regulatory sandboxes to promote innovative fintech (financial technology) products portends this State’s promotion of such tools as smart contracts. It is an interesting time to be in the fintech space. Continue reading →

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Craven County o/b/o Jessica L. Wooten v. Adel Hageb (No. COA20-442)

 

Defendant Adel Hageb (“Father”) and Plaintiff Jessica L. Wooten (“Mother”) were never married but were involved in a romantic relationship. Mother gave birth to a child in 2016 and another child in 2017. After it was determined that Adel was the biological father of both children, the court consolidated the two child support cases and ordered Father to provide health insurance coverage for both children and pay Mother $2,554.00 per month in child support. Then, on September 9, 2019, the issue of permanent child support came on for hearing.  The court found Father to have a gross income of $19,454.39 per month. Additionally, although two children born of another relationship lived full-time with Father, the court gave Father credit for one child because Father’s name was not listed on the birth certificate of the other child.  Father timely appealed.  Continue reading →

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Spouses who own businesses can often keep a tight lid on finances. This may not be an issue at the onset of marriage, but it means that often, the other spouse is clueless as to how the money is being made. In the unfortunate event of divorce, income becomes a bigger issue when litigating over support and property division. This post is to serve as a primer for two common business entities you may encounter in North Carolina: the C corporation (C corp) and the S corporation (S corp). Continue reading →

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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).

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