Watch out for those hurried, last minute North Carolina agreements that link alimony and child support termination; you could get an unintended tax consequence and the loss of the tax deduction.
While the Johnson case, discussed herein, is not a North Carolina case, it could be. Guys and gals, you simply cannot link alimony reductions to a child-related event. It doesn’t work; that is, if you want the deduction.
It is tempting to lump child support and post separation support/alimony into a bucket of one dollar amount, sometimes referred to as “family support”. This is particularly tempting in the early part of a case, but it is DANGEROUS. A couple of tax rules will help:
Rule 1: Don’t create family support as a way to get 100 percent of support as an alimony deduction as this really doesn’t work.
North Carolina alimony statutes and state case law make technicalities on the “death” element of alimony under federal tax law difficult, and one needs to exercise extreme care when drafting a private alimony agreement or contract in North Carolina.
Unlike many states, all alimony awards in North Carolina are not court orders. For legitimate strategic reasons, alimony awards are frequently private contracts in North Carolina. Generally, one cannot modify a contractual award of alimony, but court orders for alimony may be modifiable upon a change in circumstances. That scares many payors in North Carolina, so they negotiate for a private contract.
In Greensboro, a same sex couple can go to the Register of Deeds in Guilford County and obtain a North Carolina Marriage License. There are also Register of Deeds in the Piedmont Triad in Lexington, Asheboro, Graham, Wentworth, Roxboro, Yanceyville, and Winston Salem that provide the same product and service, a Marriage License.
Recently, and notably, Ireland has had a national referendum and said “yes” to same sex marriage. Ireland has long been a stronghold and defender of the Catholic faith, which has been a citadel of opposition to gays, lesbians, and of course same sex marriage.
Today, let’s deal with the “date” wardrobe you should build over time (depending on your budget). This wardrobe selection is for Summer 2015 for dinners out, movies, theater, concerts and similar activities.
Find your own look and make it your own. Be creative. It will make you feel good about yourself. Be your own person and have your own identity. Here are some suggestions: Continue reading →
Schilling v. Comm’r, T.C. Memo. 2012‑256, 2012 WL 3848477 (2012)
(a) Facts: The parties settled their divorce case by signing a separation agreement. The agreement awarded the wife $2,450 per month on spousal support for six years. It, further, provided that the wife’s spousal support would drop by specified amounts when each of their three remaining minor children reached age 18 or left home for college, whichever occurred first. Finally, the agreement provided that the husband would pay no child support, justifying this downward deviation from the child support guidelines by pointing to the spousal support provision. The agreement was incorporated into an Ohio divorce decree. Continue reading →
This article is part 4 of a series of articles regarding Innocent Spouse. This final blog on the basics of the current Innocent Spouse tax law will do two things: 1) summarize changes discussed in the first three articles; 2) give some practical guidance to attorneys, CPAs, and clients in North Carolina. Continue reading →
Part 3 of a 4-Part Series on Innocent Spouse Basics
(a) The Former Requirements: Rev. Proc. 2003-61, 2003‑32 I.R.B. 296, 2003 WL 21708514 (Aug. 11, 2003)
(b) The New Requirements: Rev. Proc. 2013-34, 2013‑43 I.R.B. 397, 2013 WL 5179241 (Oct. 21, 2013) Continue reading →
This article is part 2 of a 4 part series on Innocent Spouse basics. Be sure to read all four parts. Also, check this blog regularly for new information on innocent spouse law, as I will write about it frequently. I’ll keep you posted of new cases and developments from the IRS.
So, if you are in Asheboro or Reidsville, or wherever, this four part article should answer your questions about innocent spouse tax law and how it might affect your North Carolina divorce.
I have always said: “the Internal Revenue Service is the third party to the North Carolina Divorce”. It is, therefore, incumbent upon parties to a divorce, their counsel, and their CPAs in North Carolina to understand the Innocent Spouse rules of the Internal Revenue Code, particularly if there are tax issues outstanding. Further, understanding innocent spouse can many times help with an otherwise devastating tax situation.
This article will be in four parts, so be sure to read all four parts. Also, check this blog regularly for updates on innocent spouse law as I will write about it frequently. I’ll keep you advised of new cases and new rulings from the IRS.
North Carolina Divorce Lawyers Blog