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Articles Posted in Taxes

What does the “date of separation” mean and why is it so important?separation-date-300x202

When a spouse files for divorce the first issue to tackle is often the parties’ date of separation.  One might think that the date of separation is when the petition was filed in the divorce, or when one spouse moved out.  However, the date of separation is often fact driven and can be a complicated issue to resolve.

Pursuant to Family Code section 70 the “date of separation” means that a complete and final break in the marital relationship has occurred, such that (1) the spouse has expressed to the other spouse his or her intent to end the marriage, and (2) the conduct of the spouse is consistent with his or her intent to end the marriage.  The court has stated that there must be problems “so impaired” in the marriage that there is no reasonable possibility of “eliminating, correcting, or resolving these problems.”  (In re Marriage of Hardin (1995) 38 Cal.App.4th 448.)  Ultimately, the court will look towards the parties’ subjective intent to end the marriage, and the parties’ outward persona should not be considered. Continue reading

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During marriage, neither spouse is supposed to devalue the community estate by wasting of assets. “Wasting” means spending community money for a non-marital purpose. The classic case has been the spouse who changes his lifestyle, often in the process acquiring a friend to whom the spouse gives money, pays expenses or buys gifts. The other spouse neither knows of these actions nor would approve of them if they were known. But the non-wasting spouse can attempt to recoup losses by negotiation or in court. Continue reading

In a previous blog, we talked about different classes of experts (Joint, Hired Gun, Review) employed in family law cases.  In this blog, we will talk about the different “types” of experts we use in family law. 

Forensic Accountant

Forensic accounting is a specialty practice area of accounting that is used in litigation.  Forensic accountants are used in family law to perform tracings for separate and community property, to investigate Family Code Section 2640 reimbursement claims, Moore/Marsden calculations,  to analyze/characterize stock options, and other issues which require an “investigation” of accounting issues.

What separates forensic accountant from regular accountants is specialized training focused on investigation as well as the expectation that the outcome of their investigation will result in the preparation of reports suitable to serve as evidence in a court of law. Continue reading

Lawyers love to make jokes about how bad we are at math.  Often those jokes include statements like, “if I were good at math I would have become an engineer” or if “I was good at math and science I would be a doctor not a lawyer.” Nobody likes lawyer jokes more than lawyers, but these statements are not universally true.  There are many lawyers who are good at math.  In fact at Bickford Blado & Botros, we have the only certified family law specialist in San Diego County who is also a licensed Certified Public Accountant with a Master of Business Administration.  Having an attorney with a strong math and accounting background helps to spot and analyzes issues, but it is in no way a substitute for a financial expert.  When it comes to financial matters, there is no substitute for a qualified financial expert.

In family law, there are many reasons you may decide to use an expert.  Similarly, there are just as many different types of experts you can hire.  You might need an expert to value your family home or a business.  You might need an expert to decide a party’s income, or what custody schedule is best for your kids.  Whatever the reason might be, you need to decide first what class of expert you want.  This blog will address the three “classes” of experts we see in family law. Continue reading

San Diego is home to the nation’s largest concentration of military personnel. San Diego’s seven military bases serve the approximately 100,000 active duty service men and woman and their families (the total rises to 175,000 when dependents are taken into account.)  In addition, San Diego is home to 60% of the ships in the fleet of the U.S. Navy, and 1/3 of the active duty force of the U.S. Marine Corps.  In fact, the military and its spending in the region accounted for 26% of the jobs in San Diego in 2011.  None of this accounts for the more than 250,000 veterans who call San Diego home.  With that in mind, it should come as no surprise that San Diego family law attorneys handle many military dissolution actions.

For the most part, military divorce is very much like any other divorce.  The issues, such as child custody, child and spousal support, property division are the same as any other family law case.  However there are aspects of military divorce that are unique to service men and women.  In this blog, I will discuss some issues military members confront concerning child and spousal support. Continue reading

It was recently reported that Khloe Kardashian and Lamar Odem finally submitted their divorce judgment for processing with the Court.  I say finally because the case was first filed in December 2013.  It was stagnate for nearly two years while Lamar allegedly battled substance abuse issues.  When Lamar nearly died in October 2015, Khloe dismissed the divorce, only to re-file in May 2016.   The years long saga is now over, but that does not mean the parties’ divorce case is over.  The Court still needs to process the Judgment, and there is no way to know how long that will take.

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We are divorce attorneys, not tax experts, but marriage and finances are so intertwined that inevitably divorce and taxes do intersect. Each year as the IRS tax return filing deadline approaches, we are increasingly confronted by our clients with tax preparation questions. For specific tax inquiries, we advise that you consult a tax professional. However, we felt it may be useful to share a brief (non-exhaustive) list of some common points Continue reading

According to section 215 of the Internal Revenue Code, spousal support (otherwise known as alimony) is generally taxable income to the payee and tax deductible to the payor. However, if payors aren’t careful, they may inadvertently agree to support arrangements that are not deductible.

Retroactive Support

In California, the Court has discretion, and often exercises this discretion, to award spousal support retroactively to the date of filing. For instance, if a spouse files a spousal support motion on January 1, 2016, but it is not heard until March 1, 2016, the Court can still order the payor to pay for the months of January and February even though the hearing wasn’t until March.

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It’s that time of year again…tax time! It’s a time of gathering all of your financial documents and keeping your fingers crossed that you will get a big refund in the mail rather than having to pay Uncle Sam more money out of your pocket. Whether you got divorced or had your marriage annulled last year, filing taxes this year will certainly be different. In particular, if you had your marriage annulled, there are some specific issues you may have to deal with.

Whether you have been divorced or had your marriage annulled, either way you look at it, your marriage has come to an end. However, a divorce is the end of a marriage that was valid at the time the parties wed. An annulment, on the other hand, marks the end of a marriage that was either void or voidable at the time the parties wed. For instance, under Family Code Sections 2200 and 2201, the marriage may have been void in California if it was illegal due to incest or bigamy. Or under Family Code Section 2210, the marriage may have been voidable due to a number of reasons, including fraud, force, physical incapacity, and unsound mind. The marriage may also have been voidable because the party filing for the annulment was under eighteen years old at the time of the marriage. Or lastly, the marriage maybe voidable and thus an annulment granted if there was a prior existing marriage that took place after the former spouse was absent for five years and not known to be living.

If the marriage simply ended by means of a divorce (also known as a dissolution of marriage in California) by December 31st of the prior year, then you will be required to file a separate tax return for the taxes due April 15th of the following year. You won’t be able to even file married filing separately if your divorce has actually been finalized by the court as of the end of the prior year.However, if your marriage ended via an annulment, then tax filing gets a bit more complicated. If you were married during the last tax cycle, then chances are that you filed your taxes as “married filing jointly” with your spouse. Once the April 15th tax deadline has passed, people who filed joint tax returns are usually not allowed by the IRS to change their filing status to file separately. However, since your marriage was annulled, that means that your marriage was never valid at the time you previously filed joint tax returns. Consequently, you must now file an amended tax return for the prior year as a single person rather than as married filing jointly. This may result in you paying more taxes because typically filing jointly with your spouse has some tax benefits that single filers don’t get. On the flip side, if you would have paid less in taxes as a single person, then you will be entitled to a refund when you file the amended tax return. In addition to amending your previous tax return(s), you must file this year’s taxes separately.
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By now, it’s likely that you’ve heard the H&R Block commercials or you are at least aware of their well-advertised “Get Your Billion Back America” campaign. H&R Block, like many other tax service companies, is clearly committed to pushing for consumers to use their services so they can help them get the maximum tax benefit that they deserve. Whether you use H&R Block, one of the many online tax service programs, a personal accountant or do your taxes yourself, it is important to understand how marriage and divorce may affect your taxes. Here are some helpful tips for divorced taxpayers.

1. Know your Filing Status.
Just like getting married affected your filing status, getting divorced will too. If your divorce is official as of December 31st of the year prior to when you are filing your taxes (i..e divorced by December 31, 2014 for 2014 taxes filed no later than April 15, 2015), then you will need to file separate tax returns. No, not “married filing separately”, but rather “single”. A change in your filing status could drastically affect the amount of taxes that you are responsible for paying.

2. Adjust your Income Tax Withholding on your W-4.
As discussed above, a change in your marital status will affect your tax filing status. As a result, the amount of income tax that should be withheld from your paycheck will change. The Form W-4 that your employer gave you to fill out when you first started your, is what determines how much income tax you have withheld from each paycheck. So once your divorce is finalized, you should go to your payroll department and ask to fill out a new Form W-4 and update the number of allowances that you are claiming.3. Know When to Claim or Deduct Child and Spousal Support.
If you are receiving/paying either temporary or permanent spousal support and/or child support, then it is important to know how to properly claim or deduct it on your tax returns. Generally, if you are the one receiving spousal support, then you must claim it as income on your tax returns. Child support, however, does not count as income for federal income tax purposes and thus is not taxable. If you are the one paying support, on the other hand, you may typically deduct the spousal support payments from your income, but not child support payments. However, it’s important to take a close look at your divorce decree because sometimes, spouses agree to designate spousal support payments as non-taxable and non-deductible.
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