Its that time of the year again, so I thought I'd start a thread where we could give some tax tips, answer some questions and offer some help. There are a few of us in this forum, and I hope my fellow CPAs will join in.

Please feel free to ask questions or ask for help. If you would rather keep your question private, feel free to pm me.

I (we) will try to post some tips and pointers to help make tax season a little easier for you and to give you a sense of what you can and cannot do on your tax return.

I hope this thread helps you to navigate your way through the maze known as income taxes.

Disclaimer
The purpose of this thread is offer some help and guidence. Nothing that you read here should accepted blindly. You should always confer with your tax advisor or CPA.

 

Alimony

If you are divorced and paying or receivng alimony it has an effect on your income taxes. If the alimony is noted in a certified divorce decree it is tax deductible by the payer, but it is income to receiver. The payer can deduct it on line 31a of the form 1040 as an adjustment to gross income, but the receipient must report it as ordinary taxable income on line 11.

Be very careful not to include any child support. Child support is neither taxable or deductible.

The legal fee incurred in forming the divorce agreement, like most personal legal fees, is not tax deductable, but if the paying spouse turns out to be a deadbeat and legal fees are required to collect the alimony, they are deductible. Generally, the legal fees incurred in the collection of taxable income is tax deductible.

If you are involved in alimony either as a payor or receipient make sure to mention this to your accountant. Please consult with your accountant on this matter.

 

We use TurboTax. It works for us.

 

Nice public service thread Rob, I hope you're able to help some people.

 

Hey Rob, how about a little dissertation about IRAs and how they function differently at different income levels. Is there still a cut off point for IRAs based on income? Also, tell us how, if at all, they interact with our 401 Ks or other retirement vehicles.

 

Think long term Barbara. Turbo Tax is probably fine for your annual taxes, but I'm not sure it helps with long-term tax planning. Or maybe it does and I just don't know it.

 

Another interesting subject is how one should invest 401K/403B money.

If you use these plans for a good portion of a stock portfolio, and have your 'after tax' money invested in vehicles that do not provide Long Term Cap. gains benefits, you may actually be losing money in the long term.

 

 

Turbo Tax is an excellent tax prep program. Thats where it starts and ends.

For tax planning, retirement planning and the like, there is no substitute for a qualified Financial Planner or a Certified Public Accountant.

 

Excellent idea. That will be the topic of today's tax tip when I get home tonight.