What is a QDRO and what are some issues around future benefit payments?
What is a QDRO? A QDRO arises as a result of a divorce or a legal separation. It is an order in the United States to recognize that the non-employee, former spouse has an ownership interest in the employee spouse’s retirement plan. A QDRO may be used for spousal...
Change in child tax credit provides alternative currency for divorces
Background The child tax credit was introduced in 1997 and made available to taxpayers in 1998. At that time, taxpayers who claimed the child tax credit were provided a nonrefundable credit for each child who was under 17 years old at the end of the calendar year. As...
What happens to the built-in tax gain associated to a piece of real estate in a divorce?
Property that appreciates over time may have what is often referred to as a built-in tax gain. What is a built in tax gain? It is the capital gain a taxpayer will generate as a result of selling the property after the divorce and after the tax exclusion outlined...
How should future social security benefits be handled in a divorce?
Background In the United States, Spouse 1 can access social security benefits accumulated by Spouse 2 as long as the marriage has lasted at least 10 years. These social security benefits are not available to Spouse 1 until Spouse 1 reaches at least age 62. If Spouse 1...
How should down payments on real estate be handled in a divorce?
Parties who are going through a divorce often ask how the down payment made by one or both spouses should be handled in a divorce process. The down payment is usually an area that is overlooked and not addressed. Many times the down payment simply becomes part of the...
What happens to a tax PIN when taxpayers who file as MFJ get divorced?
Personal identification numbers are provided to taxpayers who have discovered the hard way their tax return was already filed by someone else. This is considered a fraudulent activity. In these situations the IRS will issue what is commonly referred to as a PIN...
IRC Section 965 Foreign Earnings Repatriation Tax Impacts Divorces
When foreign investments exist in the portfolio Section 965 of the Internal Revenue Code is focused on imposing a one-time tax on the accumulated earnings and profits of foreign investments. Historical background and Context “In 2004, Congress passed the American...
New Section 179 rules may increase the value of a marital estate
The definition of qualified property expands The new tax rules on Section 179 deductions expand the definition of properties that are eligible for a tax deduction, subject to phase-out rules and deductibility restrictions on profitability. The types of improvements...
New SALT deduction limitations impact divorces
An overview of the new tax law The Tax Reform Act of 2018 has limited the amount a taxpayer can deduct as itemized deductions on the federal tax return. Married couples are allowed up to $24,000 in itemized deductions. Taxpayers who have a filing status of single are...
Financial implications for equity holders involved in a personal divorce – IRC Section 199A
As a result of the 2018 Tax Reform Act, Congress introduced a new section of the IRS code (Section 199A) that allows equity holders of pass through entities such as S corporations, LLCs, general partnerships, LLPs or sole proprietorships to deduct up to 20% of the...