Are You a Victim of Financial Infidelity?
The author in this article presents a very interesting take on fidelity in marriage. The idea of “financial fidelity” is a good one. So many of my divorce clients arive at the decision to end their marriages over money issues. As a divorce professional, I appreciate the advice to have a moderate response with financial “cheating” is discovered. Many of my clients opt for a postnuptial agreement when such happens as a way to prevent the marriage from disintegrating. Having a written agreement with clear understandings of the financial boundaries and what is expected from a spouse can have a huge impact on the success or failure of the marriage going forward. I also support having the prenup discussion prior to marriage so that a marrying couple can have the money conversation. This prevents misunderstandings and incorrect expectations from developing down the road.
Read the Article at HuffingtonPost
Can I deduct my divorce or family law legal fees on my taxes?
Generally, divorce fees are not deductible.
The general rule is that divorce is a personal expense and is not deductible as a business expense. United States v. Gilmore (Gilmore I) (1963) 372 U.S. 39. So the short and easy answer is, “No.”
However, don’t despair. There are still some ways you can get a break from some of those fees.
Here are some exceptions to the general rule:
Fees to obtain alimony or taxable pension distribution.
Tax planning or advice.
Capitalize.
Even if the fees for your divorce lawyer aren’t deductible, expenses can often be capitalized. Serianni v. Commissioner (11 Cir 1985) 765 F.2d 1051, 1985 CFLR 2892. Talk to your CPA about how this can be done.
Below the line.
Now these aren’t the greatest of deductions because they are below the line. But every little bit helps… right?
Talk to your lawyer early!
If you are interested in deducting some of your legal fees on your taxes, it is important that you have a conversation with your family law attorney early so that (s)he knows to keep track of your fees and what portions may be deductible. Typically, your attorney can give you a letter at the end of the year indicating what portion of your fees was, for example, associated with the collection of alimony. Usually, this so-called “allocation letter” sent by the attorney to the client will suffice as sufficient proof of the deduction to satisfy the IRS. Goldaper v. Commissioner (1977) T.C. Memo. 1977-343, 36 T.C.M. 1381, 1979 AFLTR 1110. However, if your attorney doesn’t know that you will want to claim this deduction, you will put him in the difficult and awkward position of trying to recreate his records. It’s better that he knows from the outset so that (s)he can keep better track.
As with every tax question, it’s a really good idea to talk it over with your CPA. The rules can be complex and there are limitations. However, with a little diligence, you may save some money at tax time.
Is the economic recovery increasing the divorce rate?
Here is an interesting article from the Orlando Sentinel. Apparently with the improving economy, people are feeling freer to get divorced. That seems counter-intuitive to me. One would think that a bad economy would encourage divorce, but many of my colleagues have also noticed the trend that many couples have been holding it together because they didn’t think they could afford the divorce in the troubled economic waters.
The article quotes sociologist Brad Wilcox of the National Marriage Project at the University of Virginia,
“There’s a sort of pent-up demand for divorce after people get through tough times,” he said. “We saw that in what happened after the Great Depression, when the Depression lifted and divorce increased toward the end of the 1930s.”
I would be very interested in knowing what you think. Are people you know holding their marriages together for the recession? Will economic improvement encourage people to divorce? Comment below and tell me. I genuinely want to know.