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Innocent Spouse Relief Tax Procedure

Innocent Spouse Relief for One’s Own Income

While taxpayers are often aware that innocent spouse relief can eliminate their liability for tax on items of income earned by their spouse (or ex-spouse), fewer taxpayers realize that innocent spouse relief can also help with tax on income they earned themselves. The recent Heydon-Grauss v. Commissioner, T.C. Memo. 2018-209, case provides an opportunity to […]

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Federal Income Tax

Limited Window of Time to Structure Divorce Settlements

The tax deduction and income provisions for alimony have been repealed for divorce decrees entered into after December 31, 2018 or for earlier divorces where the agreements are modified after that date. This gives married couples and formerly married couples a window of time to structure or restructure their agreements to reduce their overall taxes. […]

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Federal Income Tax Innocent Spouse Relief Marriage & Divorce Tax Tax Tax Procedure

Tax Court Expands Innocent Spouse Relief for Divorced Taxpayers

Innocent spouse relief can allow a taxpayer to avoid joint liability for taxes that arose during the marriage. There is an exception for the would-be innocent spouse if they had actual knowledge of the item that resulted in the tax. The U.S. Tax Court addressed this limitation in McDonald v. Commissioner, T.C. Summary Opinion 2016-79, […]

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Federal Income Tax Marriage & Divorce Tax Tax

Can Lump Sum Cash Payment Qualify as Alimony?

For taxpayers who pay alimony to an ex-spouse, the tax deduction for the alimony payment is usually quite large.  It can significantly reduce their tax.  But can a lump sum payment made in cash qualify for tax-deductible alimony?   The court addressed this in Muñiz v. Commissioner, No. 15-14478 (11th Cir. 2016). Facts & Procedural History Muñiz […]

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Federal Income Tax Tax Tax Deductions

Payments Were Alimony Despite Missing Language Agreement

Payments Made to Ex-Spouse Were Alimony Despite Missing Language in Divorce Agreement Tax issues are often the last thing that spouses consider when going through a divorce. In other cases, one spouse plans for the tax issues and the other does not. This appears to have been the situation in Leslie v. Commissioner, T.C. Memo. […]

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Federal Income Tax Marriage & Divorce Tax Tax

Delayed Sale to Former Spouse Not Taxable

Divorce can present tax savings opportunities.  Many of the tax savings strategies involve transferring property and income therefrom to the spouse who is in the low- or no-tax tax bracket.  The recent Belot v. Commissioner, T.C. Memo. 2016-113, case addresses the tax free transfer of property following a divorce. Facts & Procedural History Mr. and Ms. […]

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Federal Income Tax Innocent Spouse Relief Marriage & Divorce Tax Tax Tax Procedure

Innocent Spouse Relief Granted Despite Knowledge of Error on Return

Innocent spouse tax relief can provide a remedy for spouses who are liable for taxes reported on a jointly filed income tax return.  It is an equitable remedy.  But is it available if the tax is due to an obvious error on the tax returns that the spouses both signed?  The court addressed this in Denton […]