Innocent Spouse Relief

Happy New Year 2015, this is always a time for a new start. No matter what problems you are going through you can make them better by obtaining good information – e.g. the information provided on this blog site – and implementing plans to deal with the problems.

One of my early blog posts, way back on August 5, 2014, dealt with the topic of escaping the requirement to report a share of community property income if you and your spouse file separate income tax returns (see Other Relief From Community Property Rules). Continue reading

Year-End Tax Planning and 2014 Tax Law Changes

As noted on the “About” page, one of the purposes of this blog is to offer tax savings strategies. As each calendar year nears it’s close, we work with our clients to implement various strategies to reduce their taxes for the year (or in some cases increase them for the purpose of reducing them even more in the following year).  The strategies summarized below comprise the general rules for reducing income taxes year to year and should be considered throughout the year. Continue reading

Should I Sign That Joint Tax Return

As some of you procrastinators may be aware, the October “tax season” just ended. As a result, in the last few weeks I was asked numerous times to evaluate whether or not one of the spouses undergoing a marital dissolution should sign a “married filing joint” tax return prepared by their spouse (or their spouses advisors).  The reason this question gets asked so often in these situations is because the spouse who did not prepare the joint return is afraid that the spouse who prepared the return may have understated the income or perhaps overstated deductions.   Continue reading

California Property Tax Basis Rollover

I recently had the honor of speaking at a workshop sponsored by the Los Angeles Collaborative Family Law Association about a variety of divorce related tax topics.  Somewhat to my surprise the participants were particularly interested in the topic of California real property taxes and the available basis rollover, especially a few divorce related nuances of which I wasn’t fully versed in at the time of the workshop. As a result, I have fully researched the topic. The following is a summary of the key provisions: Continue reading

Other Relief From Community Property Rules

Federal tax law provides two more methods (see previous post re Treatment of Community Income Where Spouses Live Apart) in which a spouse may escape the responsibility to report one-half of all community property income on a separately filed return.  Neither of these provisions require that the spouses live apart.

The first is provided by IRC § 66(b). Continue reading

Treatment of Community Income Where Spouses Live Apart

During a divorce situation the responsibility to report and pay income taxes on all sources of community property can prove to be a heavy financial burden (see previous post re Reporting Income and Deductions on Separate Returns).  Fortunately, the IRS offers several sources of relief from this burden.  The first type of relief is offered by IRC § 66(a) which provides that the Community Property Laws with respect to earned income may be disregarded in certain situations if: Continue reading

Reporting Income and Deductions on Separate Returns

If married spouses elect to file separate returns (see previous post re Filing Status While in Process of Divorce), each spouse should report only their own income, exemptions, deductions, and credits on their individual return (Reg. 1.66-1).  This reporting may be easier said than done, however.  It may not always be clear who owns what investment and its income stream and who paid and is eligible for which deductions.  The situation may be even more complicated if the spouses live in a community property state such as California. Continue reading