Year End Tax Planning For Divorcing Dads

by Michael Isenhart,  EA

Due to the changing political climate, it may pay to plan ahead before year end to maximize tax savings and avoid tax traps. The incoming regime defines high-income earners as those making over $250,000.00. They’ve made it clear that they will be raising their tax rates. It may be worthwhile for affected individuals to sell items yielding capital gains before the year’s end. This strategy should also take into consideration that the market hasn’t been doing very well. It still could, however, pay to take a closer look to determine feasibility. High earners may also want to look at moving bonuses and income that they will be receiving next year into this year to get the lower tax rates. You may also want to push deductions like estimated tax payments, charitable contributions, etc into next year.

 

Everyone divorcing should strongly consider consulting with their tax advisor before year end. Life changes, financial changes, existing tax law, pending legislation, legislation already scheduled to go into effect in the future impact tax planning. Tax planning is necessary to not only find tax savings opportunities but to avoid tax traps. One way in which we do that in my firm is to give all of our clients a fall checkup free of charge. It includes a written tax plan and consult.

Keep in mind when you are discussing claiming children as dependents, there is more to the equation than claiming them as a deduction. There may also be child and education tax credits. Keep these items in mind when you are determining the true cost of giving up a dependent!

Also remember that alimony is tax deductible. Child support is not.

 

 

 Michael Isenhart is an enrolled agent (E.A.) having passed a complicated two day exam required by the Internal Revenue Service. This designation allows him to represent any taxpayer before all audit levels of the IRS, including District Appeals. Michael has been in his tax practice for more than 25 years. He prepares tax returns for individuals, businesses., partnerships, corporations, estates and trusts. He is an expert on using current tax laws to benefit each individual situation.

He is the founder of Isenhart Tax & Financial in Belleville, Illinois.

Any federal or state tax advice or financial advice contained in this communication (including any attachments) is not intended or written to be used or referred to in the promoting, marketing, or recommending of any entity, accounting, tax, and financial advice, investment plan or agreement, nor is such advice intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties under the Internal Revenue Tax Code. Individuals and Businesses are advised not to act upon this information without seeking the service of a professional accountant.

 

 

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