Check out the article at citybizlist.com here.
We’re very pleased that Vicki Shemin was recently quoted in an NBC News article about prenuptial agreements. You can check out the article here.
When my arranged marriage ended, my parents decided to set me up again. But finding love isn’t that easy…
Read more here.
Meg Ryan is ready to get back into the Hollywood game.
The star of classic romantic comedies like “Sleepless in Seattle” and “When Harry Met Sally…” opened up to The New York Times Magazine in a wide-ranging interview about her divorce from Dennis Quaid, her engagement to rock legend John Mellencamp, her favorite romantic comedies and the new movie and television show she is working on after years out of the media spotlight.
Read more here.
Beck has filed for divorce from his wife Marissa Ribisi after 14 years of marriage, according to TMZ.
The publication reports that the Grammy-award winning musician filed the divorce petition in Los Angeles on Friday.
Beck, real name Bek David Campbell, 48, and Marissa, 44, were married for almost 15 years, and have a son Cosmo Henri, 14, and daughter Tuesday, 11, together.
Read more here
Jonathan Fields article, “Alimony and the TCJA: Common Misconceptions,” was published today in Massachusetts Lawyers Weekly.
Read it here.
By Jonathan Fields, Esq.
Couples in the midst of divorce often face difficult decisions regarding taxes. One of them is whether to file a tax return as “married filing jointly” or “married filing separately.” This article briefly examines the factors to consider in making what could prove a critical choice during a divorce.
I. Eligibility to File a Joint Return
First, the basics – a taxpayer’s marital status for the entire year is determined as of December 31. A taxpayer who is married (or divorced) on that date is treated as if he or she were married (or single) all year long. The IRS looks to state law to determine marital status. So, in Massachusetts, after the court approves your agreement, there is a 90-day or 120-day waiting period until the divorce is final – for the IRS, that’s the date that counts.
II. Considerations in Filing a Joint Return
Assuming a divorcing taxpayer has the option to file jointly – there are several considerations.
a. Does it Lower your Tax Burden?
In most cases, the couple will have a lower overall tax burden if they file jointly rather than separately but this, of course, will vary case to case. Filing separately generally becomes costlier overall as the disparity in incomes increase. In any event, this decision should be made with input from a qualified accountant.
A critical economic consideration concerns the deductibility of any alimony payments made during the tax year. If a couple files a joint return, the IRS does not permit alimony paid to be deducted from a payor’s gross income.
c. Joint and Several Liability
The filing of a joint return subjects both filers to joint and several liability for all taxes, interest, and penalties due in connection with the return — regardless of each spouse’s share of the taxable income. The IRS may attempt to collect all or any of the balance due from either spouse, even if your divorce agreement says otherwise. A spouse who believes the other spouse has understated income may wish to file a separate return, even if it results in a higher tax liability – because a spouse filing a separate return is not responsible for the tax liabilities of the other spouse.
d. Amending Returns
Another consideration is the limited ability to amend a jointly filed return. Once filed, a taxpayer cannot amend his/her filing status after the April 15th deadline. Conversely, a separate return can be amended to a joint return at any time up to three years from the original April 15th deadline.
Individuals going through a divorce must carefully consider the ramifications of their tax filing status. The consequence of the wrong choice might be serious – making it critical to get input from an accountant and divorce attorney prior to filing.
Article I wrote just published in Divorce Magazine….
With the new Tax Cuts and Jobs Act of 2017 (TCJA), U.S. Congress made significant changes to the Child Tax Credit and dependency exemptions that will matter a lot to divorcing parents. The key takeaway: the Child Tax Credit follows whoever has the dependency exemption – so it still matters how the dependency exemption is allocated in divorce agreements. Further, to those who say that the TCJA eliminated the dependency exemption – this is not true. It has been reduced to zero through 2025, but it has not been eliminated.
Child Tax Credit and Dependency Exemptions: Background
A little background first. The dependency exemption was $4,050 per “qualifying child” in 2017 – which meant that, to someone with a 35% effective tax rate, it was worth about $1,400. It was available to most taxpayers as it only began to phase out for single filers at adjusted gross incomes of $261,500.
Subject to a multiplicity of factors beyond the scope of this short article, the “qualifying child” was one who reached the age of majority according to the state in which the child is domiciled. Most states recognize 18 as the “age of majority” – which is the age at which state residents are legally considered adults. The age at which a minor child qualifies to become emancipated (meaning that the minor is no longer legally under their parents’ care, and that they will have all of the rights, responsibilities, and privileges of someone who has reached the age of majority) varies from state to state.
The primary custodial parent is entitled to claim the dependency exemption unless the parent agrees to release the exemption to the other parent by completing and filing Form 8332 with the IRS. Divorce agreements typically contain a provision as to how the dependency exemption is allocated.
The Child Tax Credit, as noted above, attached to whoever had the dependency exemption – and the TCJA doesn’t change this. However, until TCJA, the Child Tax Credit ($1,000 per child in 2017) began to phase out for single filers at adjusted gross incomes of $75,000 – so many divorce lawyers who deal with higher net worth clients never really confronted it.
The Child Tax Credit is More Valuable Under the TCJA
The TCJA made the Child Tax Credit more valuable, doubling it to $2,000 per “qualifying child” and making it available to most taxpayers; it only begins to phase out for single filers at adjusted gross incomes of $200,000. And, unlike the dependency exemption, it’s a credit: that is, it applies dollar-for-dollar against any taxes owed. Even better, it’s a refundable credit of up to $1,400 per child. This means that if the amount of the credit is larger than the tax owed, then the taxpayer gets a cash refund for the difference (up to $1,400).
As with the dependency exemption, there are a host of factors beyond the scope here that define the “qualifying child.” For the most part, however, to be eligible for the Child Tax Credit, a child must be under 17 years old as of December 31 of the tax year in order for the Child Tax Credit to apply.
The bottom line: if you’re going through a divorce, make sure you and/or your lawyer have a good handle on how the new tax law has impacted this area. You don’t want to leave valuable dollars on the table.
Read article here.
By Jonathan Fields, Esq.
The transfer of property between spouses and ex-spouses pursuant to a divorce generally is not considered a taxable event per §1041 of the Internal Revenue Code. See here for more information. So, you and your spouse can generally divide a retirement or brokerage account without tax consequences. The marital home, however, is a different story.
Under IRC §121, if you have a capital gain from the sale of your principal residence, you may qualify to exclude up to $250,000 of that gain from your income or up to $500,000 of that gain if you file a joint return with your spouse. The following “ownership and use” rules apply:
- During the 5-year period ending on the date of the sale or exchange, the residence must have been owned by either spouse and used by both spouses as their principal residence for periods aggregating 2 years or more.
- An individual shall be treated as using property as such individual’s principal residence during any period of ownership while such individual’s spouse or former spouse is granted use of the property under a divorce or separation instrument.
- The exclusion can only be applied to one residence every two years.
In cases of divorce, taxpayers can benefit from both the ownership and use periods of former spouses to satisfy the requirements. If a taxpayer receives a home as part of a divorce property settlement, the taxpayer’s ownership period will include the time the spouse or former spouse owned the home. In addition, a taxpayer is treated as having used the home as a principal residence during the time the taxpayer owned the residence and the taxpayer’s spouse or former spouse was permitted to use it—under a decree of divorce or separation—as a principal residence.
A caveat that recurs with frequency in our practice: the exclusion does not apply to the extent it is used as a non-residence – i.e. a home office. Therefore, if the house is sold at a $250,000 gain but the taxpayer has taken $100,000 in depreciation deductions for home office use, then only $150,000 is eligible for the exclusion ($250,000 in realized gain less $100,000 depreciation).
Recent scientific research by Tara C. Marshall, “Facebook Surveillance of Former Romantic Partners: Associations with Post-Breakup Recovery and Personal Growth,” indicates that following your ex on Facebook is bad for your health. It can cause negative feelings, greater distress over the breakdown of the relationship, obstruct the ability to heal from the relationship and move on, and prevent personal growth. Simply remaining Facebook friends is better than constant Facebook monitoring as it can decrease the longing you feel for the ex and the negative feelings. Those with no Facebook connections with the ex experienced better outcomes, however. The article also describes an earlier study by Ty Tashiro and Patricia Frazier, “I’ll Never be in a Relationship Like that Again: Personal Growth Following Romantic Relationship Breakups,” that investigated the link between romantic breakups and personal growth. In that study, participants described several aspects of personal growth. The article in Psychology Today is well worth a read.
Read the article here.