In general, according to IRS, there are no tax deductions that might ease the pain of divorce. However, even though it has no sympathy for the legal fees incurred by a couple who split, a husband and wife might be able to salvage a deduction for the portion of expenses in some circumstances such as tax advice in connection with a divorce, as well as legal fees to obtain taxable alimony. This research paper is going to explore these questions more deeply by examining the provided situation of Bill and Hillary.
In provided case, Bill is a counselor who was accused by his wife in an affair with another woman. In order to prevent the divorce, he spends $5,000 in legal fees. According to Reg §1.262-1, “General legal fees relating to a divorce or
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Since the court required Bill to pay alimony to Hillary, legal fee costs incurred by Hillary in the process of collecting alimony from Bill are “deductible as ordinary and necessary expense incurred for the production or collection of income” (Elsie B. Gale., 13 TC 661, Code Sec(s) 22). This decision was reinforced in the case of Barbara B. LeMond v. Commissioner of Internal Revenue when tax court decided that “attorneys' fees paid or incurred by the petitioner during the taxable years in connection with securing a financial settlement with her husband incident to separation and divorce are deductible as nonbusiness expenses … in so far as they resulted in the production or collection of income taxable to the petitioner.” However, Reg §1.67-1T 2-percent floor on miscellaneous itemized deductions “disallows deductions for miscellaneous itemized deductions … in computing taxable income … to the extent that such otherwise allowable deductions do not exceed 2 percent of the individual's adjusted gross income.” As a result, Hillary can deduct $2,000 in legal fees but her adjusted gross income should be at least $100,000.
Therefore, IRS provides taxpayers with the set of rules and tax court cases which help to identify the possible tax consequences. Through the above case study, $5,000 in legal fees spent by Bill in the divorce process are nondeductible personal expenses. On the other hand, Hillary is able to claim a deduction of $2,000 for legal fees related to collecting alimony taking into account that her adjusted gross income is $100,000 or
The acknowledgement of the need for divorce reform stemmed from the substantial increase in the number of divorces and what was viewed as “the declining stature of the married state.”
The expenses for divorce have increased over the past several decades since divorce became a prominent thing in society. The cost of the divorce industry is approximately $50 billion a year, which comes from the pockets of divorcing couples and the taxpayers who support the state agencies involved (McElroy, 2014). According to a study done by the Marriage and Religion Research Institute, marriages have been proved to promote economic growth, while divorce slows it down. When couples are divorced, it means there will be more households which means more housing, power and resources are required (Haury, 2012). However, with the way that the law is currently, it saves time and money than it would if it were any different. With a longer waiting period like Cathy Meyer suggests, it would cost even more
The most prominent of said guidelines are that in cases where “the merits of a divorce action are not contested, whether or not an answer has been filed, there is no requirement that the testimony of the complaining party be corroborated by witnesses; the court may not grant a divorce when the parties seek to procure a divorce for fraudulent purposes; and attorney’s fees awarded in the nature of support may be made payable immediately or in
Alimony is a legal obligation to provide financial support to one’s spouse before or after marital separation or divorce. Traditionally, the husband was responsible for paying alimony to a separated or former wife but since the 1970’s, thanks to gender equality movements and now to changing marital laws, both spouses are now legally recognized for paying alimony to one another in cases of marital separation or divorce. Though it is often required to be paid on top of child support, in cases where the separated or divorced couple has children, alimony is an entirely
Married couples often file joint tax returns as the IRS extends certain tax breaks to
In regards to the second criteria needed for Innocent Spouse Relief, it is a necessity to have a substantial understatement of the income or credits for the tax payers. Substantial Understatement of income tax (§ 1.6664-2); substantial can be defines as 10% of the tax required or $5000-10,000 depending on C or S corporations. Understatement can be defined as the tax you
The FBI, under Director James Comey, seems to have wilted under the pressure of the Clinton super-powers by refusing to recommend prosecution for all the explicit ways Hillary violated 18 U.S. Code § 793(e) and (f). What normally requires a prima facie determination making "gathering, transmitting or losing defense information" a felony based on “gross misconduct” alone, has been complicated by adding the burden of proving intent, in this case, to excuse Comey’s decision.
As long as there has been marriage, there has been divorce. Divorce cases have dated as far back as the 1600’s. Originally, they were simple matters. Men, generally, received custody of the estate, assets, and children. Women would receive nothing. However, divorce reform came around in the 1970’s to fix this inequality. They introduced alimony payments and custody favoring women. With the changes to divorce law, came more complexity in deciding cases. Cases, such as Dan v. Karen, have to take into consideration lost opportunities, appropriate payment, and any future issues that might arise. In Dan v Karen, Karen gave up her job to take care of their children, moved away from her family so Dan could get a job, and provided for Dan when he did
Clinton, on the other hand, wants to raise taxes on the wealthy and lower taxes on companies that hire more people. She would keep the taxes the same, but add an additional bracket for the highest earners. Clinton has proposed altering the medium-term and long-term capital gain tax benefits for people with at least 5 million dollars in earned income. Investors wouldn 't see any reduction in long-term capital gains taxes until they hold their investment for at least two years, and they wouldn 't see the current 20% rate unless they were to hold investments for six or more years. She is also taking aim at estate tax reform and social security payroll tax. Clinton 's plan would add 1.1 trillion in revenue over the next 10 years (Sahadi)
But this has not always been so. The system existing before the adoption of the Family Law (Scotland) Act which was to be found in the now repealed section 5 of the Divorce (Scotland) Act 1976 was characterised and criticized for its lack of clear guidance and objectives regarding the making of settlements and the great judiciary discretion it led to . Courts could take into account all the circumstances they wished and the English legal framework established by the aforementioned Matrimonial Causes Act 1973 was more developed that the position prevailing in Scotland at that time . “A key aim of the 1985 Act was therefore to create a much clearer framework to inform decisions about the financial consequences of divorce” . This as undeniably
No fault divorce has allowed women and men (and more recently, same sex couples) the option to end their marriage simply because they no longer want to be married. However, this presents new legal questions which need to be answered. The courts must determine alimony, or spousal support. After a marriage, one spouse might need to support the other based on length of the marriage, difference in incomes or lost earning potential. However, determining a fair way to allocate alimony is an important issues to ensure both partners come out of the marriage on equal footing. Establishing new guidelines for alimony is critical to ensuring that there is equality at the end of a marriage.
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Losers: The rich. Clinton proposes three new ways to tax high earners more, including a 4 percent additional tax on the less than 1 percent of individuals who earn $2.5 million or more per year; a new minimum effective tax rate of 30 percent, modeled on the “Buffett rule,” for individuals earning $1 million or more; and a hard limit on the value of deductions (outside of charitable contributions) that high earners can claim on their tax
Question 1: The classification of this executive order, whether it is a refugee ban, Muslim ban, or immigrant ban, why is it important for our political principles? Which groups of people cannot be banned from any kind of government services or benefits?
This article talks about how the divorce is expensive for parents for the reason that of the tests of meeting children's economic and socioemotional needs after separation. The article used the National Survey of Families and Households (N = 1,935), and they were discovering whether probable economic and parenting costs had anything to do with divorce. This article was helpful because the author examined that mothers were the ones that expected higher financial costs than fathers, while fathers are the ones that expect more parenting difficulties.