Board Certified Family Law Specialist Matt Arnold of Arnold & Smith, PLLC answers the question ” Is there some property that the judge cannot divide?”
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This quarter, we discuss how the Internal Revenue Service has spotted a huge gap between alimony deductions claimed and the amount of alimony income received by those entitled to it. In general, people who are ordered to pay alimony to a spouse or ex-spouse can claim and receive a tax deduction. The government report suggests that either people paying alimony are exaggerating the amounts they paid or people receiving alimony are underreporting that income, or both. Deductions exceeded reported alimony income by some $2 billion.
The IRS has announced that it is changing the way it selects tax returns for audits in order to catch more suspicious returns involving alimony. What does this mean for you? It means that when reporting income or claiming deductions related to alimony, you need to be precise. If you have questions regarding how much alimony you should be reporting or the amount of deductions to which you are entitled, you should speak to a family law attorney to make sure you are handling these issues correctly.
Also in this issue of our family law newsletter, we explore how the issue of student-loan debt can complicate divorce settlements. In general, marital debts are divided equally, but many spouses incurred student-loan debt before they married, making it separate debt. Some common issues complicate the division of student-loan debt in divorces, such as whether both spouses contributed to paying off portions of the debt during the marriage, which spouse benefited from the spouse’s degree during the marriage, whether the loans were consolidated and which spouse can afford repaying the debt.