Miscellaneous Income

Alimony and Child Support - Partial payment

Asked Friday, December 15, 2000 by an anonymous user

CPA Answer:

When both alimony and child support are made together in a monthly payment, it is presumed that child support is paid first. If your husband did not pay the full amount in a month or many months, then you need to pick up as income the difference over the child support amount for that month as alimony and income on your tax return. It is reported on IRS Form 1040, page 1.
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Divorce & Marriage Issues

Child's medical expenses - child lives with divorced spouse

Asked Friday, December 15, 2000 by an anonymous user

CPA Answer:

A noncustodial parent does not lose the right to claim the child's medical expenses (health insurance, drs, dentists prescription drugs etc) as a itemized deduction on IRS Schedule A (subject to the 7.5% AGI limitation) if both the custodial and noncustodial parent together provide more than half of the support of the child and either had custody for at least six months during the year.
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Medical Expenses

Child's medical expenses - living with divorced spouse

Asked Friday, December 15, 2000 by an anonymous user

CPA Answer:

A noncustodial parent does not lose the right to claim the child's medical expenses (health insurance, doctors, dentists prescription drugs etc.)as a itemized deduction on IRS Schedule A if both the custodial and noncustodial parent together provide more than half of the support of the child and either had custody for at least six months during the year.
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Divorce & Marriage Issues

Form 8332 - Claiming children for a Noncustodial parent

Asked Friday, December 15, 2000 by an anonymous user

CPA Answer:

A noncustodial parent may claim his or her child(ren) on his or her tax return if the custodial spouse signs IRS Form 8332.
It is the Release of Claim to Exemption for Child of Divorced or Separated Parents. The signed Form 8332 must be attached to the noncustodial tax return each year.
A noncustodial parent can ask the custodial parent to sign Form 8332 Part I which is a release of Claim to Exemption for future years.
If this part is signed then the noncustodial parent may photocopy this form each year and attach it to the tax return.
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Dependents & Exemptions

Form 8332 - Noncustodial parent claim of children of ex-spouse

Asked Friday, December 15, 2000 by an anonymous user

CPA Answer:

A noncustodial parent may claim his or her child(ren) on his or her tax return if the custodial spouse signs IRS Form 8332.
It is the Release of Claim to Exemption for Child of Divorced or Seperated Parents.
The signed Form 8332 must be attached to the noncustodials tax return each year. A noncustodial parent can ask the custodial parent to sign Form 8332 Part I which is a release of Claim to Exemption for future years.
If this part is signed then the noncustodial parent may photocopy this form each year and attach it to the tax return.
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Divorce & Marriage Issues

Form 8379 - Injured Spouse relief

Asked Friday, December 15, 2000 by an anonymous user

CPA Answer:

Form 8379 is the form you can use for Injured Spouse relief to get your portion of a joint tax returns refund.
You are an injured spouse if all or part of your share of the overpayment shown on your joint IRS Form 1040 was or is expected to be applied against your spouse’s past due child support or spousal support payments of Federal debts such as student loans.
You can file IRS Form 8379 if all 3 of the following conditions are met.
You are not required to pay the past due amount.
You received and reported income such as wages; taxable interest etc. on a joint return or your main home was in a community property state other that Arizona. (Community property states are CA, ID,LA, NE, NM, TX, WA and WI). You made and reported payments such as Federal income tax withheld from your wages or estimated tax payments or you claimed an earned income credit or other refundable credit on a joint return.
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Filing Status & Requirements

Injured Spouse - Form 8379

Asked Friday, December 15, 2000 by an anonymous user

CPA Answer:

Form 8379 is the form you can use for Injured Spouse relief to get your portion of a joint tax returns refund.
You are an injured spouse if all or part of your share of the overpayment shown on your joint IRS Form 1040 was or is expected to be applied against your spouse's past due child support or spousal support payments of Federal debts such as student loans.
You can file IRS Form 8379 if all 3 of the following conditions are met.
You are not required to pay the past due amount. You received and reported income such as wages, taxable interest etc. on a joint return or your main home was in a community property state other than Arizona. (community property states are CA,ID,LA,NE,NM,TX,WA and WI). You made and reported payments such as Federal income tax withheld from your wages or estimated tax payments or you claimed an earned income credit or other refundable credit on a joint return.
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IRAs - Traditional

IRA - Paying college education

Asked Wednesday, December 13, 2000 by an anonymous user

CPA Answer:

Withdrawals from a regular IRA that are used for higher educational expenses at a post-secondary school are not subject to the 10% penalty on early withdrawals that is reported on IRS Form 5329. Qualified expenses include tuition, books, fees, supplies and room and board if student is at least a half-time student.
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College Planning & Financial Aid

What is the tax consequences of taking money out of my IRA and paying for my daughters college education ?

Asked Wednesday, December 13, 2000 by an anonymous user

CPA Answer:

Withdrawals from a regular IRA that are used for higher educational expenses at a post secondary school are not subject to the 10% penalty on early withdrawals that is reported on IRS Form 5329. Qualified expenses include tuition, books, fees, supplies and room and board if student is at least a half-time student.
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Educational IRA

What is an Educational IRA?

Asked Wednesday, December 13, 2000 by an anonymous user

CPA Answer:

An Educational IRA is a custodial account or a trust set up for the purpose of paying the qualified higher educational expenses of the designated beneficiary of the account.
The designated beneficiary must be a child under age 18. In general higher educational expenses include tuition, fees, books, supplies and room and board for at least half-time attendance.
You may contribute up to $2,000 each year.
The contributions are not tax deductible.
For the current year, an individual may contribute to a child’s educational IRA if those individuals Modified Adjusted Gross Income is not more than $ 110,000 ($190,000 for a married filing joint return).
There is a phase out if the MAGI is between $95,000 and $110,000 for non-joint filers and between $190,000 and $220,000 for joint filers. Amounts in the account accumulate tax-free until distribution.
Distribution of the contribution is always tax-free and the earnings on the contribution are tax free if less than or equal to the years educational expenses.
If more than the educational expense then a pro rata calculation is required. The assets in the account must be withdrawn by the age of 30. No contribution amount may be made in any year who also contributes to a qualified state tuition program on behalf of the same beneficiary.
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