Tax Warrior Chronicles

Is Your W-4 Optimized for You?

Posted on Thu, Jan 23, 2020

By: Kelly Ha

 

The W-4 is the IRS form you complete when starting a new job to let your employer know how much federal tax to withhold from your paycheck.  Even though you’ve given your employer a W-4 in the past, with the many changes to the tax code, you should consider revisiting this form. There are specific times when you should consider refiling it to optimize take-home pay, while still fulfilling your tax obligations. Today’s post will look at how you can optimize your W-4 for you and your family—and when you should do it.

 

As we mentioned, Form W-4 lets your employer know how much money to withhold from each paycheck for federal tax purposes. Accurately completing your W-4 is

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Tax Impact of Divorce

Posted on Thu, Dec 05, 2019

By: Stefanie Ostrich, CPA

 

Divorce brings many changes to the lives of families.  It can also bring a number of financial planning opportunities.  All should be discussed with both your tax professional and attorney and addressed in your divorce agreement. Today, we’ll discuss a few tax-specific topics to include in those crucial conversations.

 

Withholding

It is always a good idea to revisit your payroll withholdings after any life change, especially after a divorce.  The IRS has a tax withholding estimator on its website.

 

Tax Filing Status

Your tax filing status is reflective of your marital status as of the last day of the calendar year.  If you were divorced at any time during the

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Divorce on Schedule 1 – Alimony

Posted on Thu, Aug 08, 2019

By: Sherri Sorbello, CPA

 

The tax treatment of alimony was one of the many items modified by the Tax Cuts and Jobs Act of 2017 (“TCJA”).  Alimony received is no longer taxable income to the recipient spouse and alimony paid is no longer deductible by the payer spouse for divorce or separation agreements executed after 2018, unless...

 

This change does not apply to divorce or separation agreements executed prior to 2019. For those agreements, the prior rules apply in which the alimony recipient reports the alimony received as taxable income and the payer of the alimony can deduct the alimony paid as an “above-the-line” deduction. An “above-the-line deduction” adjusts gross income, which

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Head of Household in Post-TCJA Times: Still a Worthy Tax Filing Status?

Posted on Thu, Sep 27, 2018

By: Donna M. Pironti, CPA, MSA, CFF

 

Since the Tax Cuts and Jobs Act of 2017 (TCJA) we have received many questions on the head of household (HOH) filing status changes.  Although the definition of HOH and how one can claim that status has not changed, the rate changes have caused it to lose some of its pre-TCJA value. 

 

Pre TCJA, if a taxpayer met the HOH requirements the taxpayer landed in a significantly better tax bracket compared to married filing separately (MFS).  For example, at $500,000 of taxable income the savings of HOH over MFS was over $20,000, and HOH over single saved over $7,000.  Post TCJA, this difference is greatly reduced with MFS and HOH now only about $5,400 apart

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Effect of the New Tax Law on Alimony

Posted on Wed, Jan 17, 2018

By: Clare Porreca, CPA, MT

 

Those currently in divorce proceedings, or contemplating a divorce, should understand the effect the Tax Cuts and Jobs Act will have on the deductibility of alimony after December 31, 2018.  Important time-sensitive decisions must be considered to mitigate the impact of the tax law change.  If you or someone you know are contemplating or are currently in divorce proceedings, this is an important blog to read and share!

 

Prior to the tax reform changes, alimony payments were included in the taxable income of the recipient and were allowed as a deduction from Adjusted Gross Income (AGI) by the payer.

 

Under the Tax Cuts and Jobs Act (“Act”), alimony payments

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Is It Time to Review the Beneficiaries of Your Estate Plan?

Posted on Mon, Apr 27, 2015

While our own mortality is something we rarely want to think about, it is necessary to plan for it in order to provide for our family and loved ones once we are gone.  As tax advisors, part of our role is to ensure you are thinking about your estate plan and the beneficiaries of the wealth you have worked so hard to build over the course of your life. Choosing your beneficiaries, or what your beneficiaries receive, is not a “one-and-done” event--situations are not static and change over time. Accordingly, estate plans should be reviewed regularly to ensure that the goals are consistent with both your financial and non-financial objectives.

 

Life-changing events such as births, marriages,

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Life Transitions: 10.3 Tax Facts About Selling a Home

Posted on Mon, Oct 06, 2014

Life is full of changes.  Big changes.  Selling one’s home certainly qualifies as one. For many it is among the largest financial transactions they will ever make, and one of biggest assets they will ever own. There are often life transitions, such as marriage, divorce, loss of spouse, or career change that may cause one to sell a home.  And, understandably, because of these layered issues, taxes usually are not at the forefront of thought. The Tax Warriors® would like to share some helpful facts that you should know if you sell your home. 

 

Here are 10.3 facts to keep in mind if you sell your home this year:

 

1. If you have a capital gain on the sale of your home, you may be able to

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Life Transitions: Tax Implications of Divorce or Legal Separation – Part II

Posted on Tue, Jul 22, 2014

As discussed in Part I of this blog series, divorce or legal separations can be complex and litigious situations. In this two-part series, we explain tax issues that may arise for those in the midst of a divorce. It is information that could be helpful for individuals in the early stages of the divorce or separation process.

 

Last week, we focused on topics for couples with children.  In Part II, we will look at other topics like business dealings, property disputes and pension benefits (as well as some others). We wish to reiterate that the personal and emotional toll that divorce takes on couples is serious business and we realize that tax concerns may not be at the forefront of one’s

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Life Transitions: Tax Implications of Divorce or Legal Separation - Part I

Posted on Mon, Jul 14, 2014

Taxes impact all aspects of our lives; from birth to death and everything in between. This is especially true in the realm of divorce or legal separation. In addition to the many personal issues the divorce process entails, several tax concerns should be considered to ensure that costs are minimized and that important tax-related decisions are properly made. Emotions can run high during this time, but a failure to acknowledge and address important financial issues can make the process even more stressful.

 

In this, the first of a two-part blog series, we will look at the critical issues that should be addressed during the transitional phase of divorce or separation with a special focus on

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Temporary Alimony Payments Not Deductible Without Signed Agreement

Posted on Wed, Jun 26, 2013

 

If you get married, there are plenty of documents to sign to establish and recognize the union. When seeking a divorce it takes an equal, if not greater, amount of signed paperwork to undo all that has been done. Through it all, one thing is certain—nothing is final until it is signed by both parties.  And, making financial commitments without a signed agreement can be costly. Just ask James Faylor.

 

In the case of James J. Faylor, the Tax Court has held that $20,000 in temporary support payments made by an individual to his spouse did not qualify as alimony. The spouses were divorcing and the payments were made under a temporary support agreement that was being negotiated by their

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