Tax Preparation For Divorced Or Divorcing Individuals

It is that time of the year: compiling all of your tax information to ensure you get the most benefit from your available deductions and exemptions. Here is a quick list of items to help you in gathering the information you need and some sound suggestions:

1. Make sure that you have all of your W-2s, 1099s and K-1 forms that reflect your taxable income for the year. 1099s reflect a variety of income, including earnings, interest, dividends, capital gains and short-term gains from investment s, and distributions from retirement accounts. Your employer and financial institutions should provide copies of this information.
2. Make sure that you have a 1099 to reflect your mortgage interest paid for the tax year. You can call the mortgage company for this document. Real estate taxes are also deductible against income. You can get the amount of your real estate taxes paid for the year from the municipality where you reside.
3. You can deduct health care expenses up to a certain a percentage of your adjusted gross income. Gather all of the your out of pocket costs for all family members for whom you contributed, including yourself. Only consider the costs you actually paid and deduct any insurance reimbursements. Consult with your accountant as to how much of these costs you can deduct. Ask if your health insurance is a deduction available to you if you are self-employed.
4. Work-related child care costs are also deductible costs. Talk to your accountant as to how much.

1. If you contribute to a regular IRA (pre-tax) contribution, provide proof of same to your accountant as that is also deducted from your income when determining your tax rate.
2. If you are divorced and are not the parent of primary residence for the children, then you must have the other party sign Form 8839 to get the dependency exemption you may be entitled to receive.
3. Alimony payments are tax deductible by the payor and included as taxable income to the payee (recipient). You should make sure that the amount the payor deducts and the amount the payee includes as income is the same. Otherwise, you may be flagged for an audit.
4. If you are in the process of getting divorce, you should consider filing jointly (assuming that there is no unreported income by the other party) and negotiate how the refund will be distributed between the parties.
5. Remember that all taxes are due on April 15^th. If you do not pay the taxes due, you will be subject to interest and penalties if paid later on. Remember, payees of alimony, that you should discuss with your accountant the amount of quarterly taxes you should pay to ensure that you are not short by year-end, which could mean additional penalty to your tax bill. It may be helpful to figure out the monthly amount, deposit same in an account designated for taxes and pay it out quarterly.
6. Keep your tax returns for at least seven years, together with supporting documentation, in case you are audited by the Internal Revenue Service in the future.