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Divorce and Your Money - #1 Divorce Podcast

Visit us at www.DivorceAndYourMoney.com Divorce and Your Money is your guide to avoiding costly mistakes during divorce. Shawn Leamon, Certified Divorce Financial Analyst and MBA, wants to help you learn the fundamentals of how to get a divorce. Whether you are looking for an uncontested divorce, a do it yourself divorce, or an online divorce, resources are available to offer guidance. Through his divorce podcast and divorce blog, Shawn offers his professional opinion on the best ways to handle the end of your marriage. He covers topics including how to file for divorce, divorcing a narcissist, and finding the best divorce attorney. Even tricky subjects such as a “what is a QDRO?” and “is alimony taxable?” are tackled through these venues. If you need to know what the first steps are or what you should do to head to trial during litigation, you can find resources to give you a step-by-step guide to what comes next. Think of his advice as an alternative to divorce support groups where you can find exactly what you need when you need it. He offers one-on-one divorce coaching to give you a solid grasp on the decisions that are bound to affect your financial future. Before you have a divorce decree in hand, you will likely go through some type of divorce mediation. For any spouse saying, “I want a divorce,” you need to make sure that you are getting the financial future you are entitled to. Do not allow yourself to be blinded by the emotional, legal, and financial burden that divorce can become. Instead, take control of your situation with sage wisdom to help all individuals make better financial decisions for their independent future. If you find yourself asking “where are the best divorce lawyers near me?”, Shawn can help you to recognize the best of the best. Whether you need a divorce in Texas, a divorce in Florida, or a divorce in New York, you will have all the knowledge you need to find the best team of professionals to assist you. You can start from a place of being legally separated or once you have already started to file for divorce using free divorce papers or an attorney. No matter where you or your marriage may be in the process, Shawn Leamon has professional advice to offer your unique situation. A simple no fault divorce or a high-stakes power struggle are all areas he has vast experience with during his work outside of Divorce and Your Money. Let his advice be a guide to help you get all that you need for a secure financial future in your divorce records. It will not make a difference whether you are getting a divorce in Ohio or a divorce in California if you are following the basic principles set out through Divorce and Your Money’s divorce blog, divorce podcast, and divorce coaching.
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Sep 12, 2017

Filing your taxes at the end of the year is an arduous process, even under the best of circumstances. Most taxpayers are filled with trepidation at the very idea of filling out the proper forms, tallying up their total income, then having it reviewed by the Internal Revenue Service. However, the process is made even more complicated by unique circumstances (for instance, if you choose to include your child support as income. Since this form of income plays a large role in your finances, how do you plan to file?

If you are not sure whether your child support is taxable, it is time to begin sorting through the finer details required by the government during tax season. We will take a closer look at three important points that will leave you feeling more confident next tax season.

Child support is based on your income level.

When determining the appropriate level of child support, judges will often base the number on the income of the parents. While specific formulas and calculations vary from state to state, this general rule of thumb will predict the amount of child support you could receive. The income of both parents will typically be taken into account.

Because child support is usually based on your current income levels, it makes sense that many individuals and families believe that it is considered taxable income, but that is actually not the case.

Child support is not considered taxable income.

Child support is not actually factored into your gross income, and should not be added to the rest of the funds you earned that year while filing taxes with the IRS. If you know that your child support should not affect the levels of taxation at the end of the year, it gives you a little more financial security in the present moment, which allows you to more effectively plan and budget your child-support check each month. You should know exactly what the final number will be without having to account for a portion of it being owed to the federal government.

If you are the spouse who is ordered to pay child support, you should know that you will have no significant advantage. Child support is not considered a tax deduction for the party ordered to pay it. Therefore, you cannot deduct the overall amount of the payments from your taxable income when reporting your annual taxes to the IRS. You are required to report your income, including the entire money you paid out for child support to the federal government each year.

Paying child support does not entitle you to claim children as dependents.

Usually, the custodial parent has the right to claim children as dependents, as long as all of the tests from the IRS claiming exemptions are met. In order for the parent who pays the child support to claim them as dependents, additional steps must be followed. If you issue a check to help financially provide for them each month, it does not necessarily grant you the automatic ability to claim that tax credit.

In order for the noncustodial parent to claim children as dependents, they must file a Form 8332, which allows the custodial parent to release their rights to claim them as dependents on that year’s tax return. This form is known as a Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. Bear in mind that you must have a separate form for each child that you plan to claim as a dependent that year.

The custodial parent can also complete this form for a set number of years into the future. If you do so now, you can prevent hassles and headaches during each tax season. If the plan changes in the future, the custodial parent can also revoke the release of the claim to be an exemption—with a new form for each child.

Prepare for tax season early.

Filing your taxes when you receive child support does not have to be an arduous, time-consuming, and frustrating process, as many may be led to believe. It helps to plan early and know what your rights are, learn the proper process for filing your taxes to claim dependents, and accurately report your income.

If you have any questions regarding the finer details of filing your taxes following divorce, consider hiring a tax accountant to assist you. Search for a professional who is well-versed in handling situations that financially mirror your own. A good tax accountant can help you efficiently and correctly  complete your taxes, which will take away some of the pressure and burden that this time of year can bring about.

Shawn Leamon, MBA, CDFA is the host of the “Divorce and Your Money Show” and Managing Partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

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