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San Antonio, Texas Tax Agent for Divorce-Related Tax Issues

San Antonio enrolled tax agent for innocent spouse relief

Tax Help With Divorce Tax Issues in Corpus Christi and South Texas

Those who are getting divorced will need to address multiple types of financial issues. In many cases, divorcing spouses will focus on financial concerns such as how to divide money and property and whether either party will pay spousal support or child support to the other. However, taxes are another important issue that will need to be addressed, and in some cases, tax liabilities can continue to affect one or both spouses even after their divorce is complete. Those who need to address tax concerns during the divorce process or who are facing collection actions by the IRS following their divorce will want to work with an experienced tax consultant to determine their best options.

E. Villanueva & Associates, Inc. provides tax help for divorcing couples and divorced spouses. We can provide guidance on how to handle tax concerns during the divorce process, and we can assist in cases where a person owes money to the IRS based on the actions of their ex-spouse. As a former IRS agent, Ed Villanueva understands the tax concerns that can affect divorcing spouses. His 35 years of experience handling tax-related issues will ensure that taxpayers can resolve these concerns successfully.

Addressing Tax Issues During Divorce

The decisions made during the divorce process can have a variety of tax consequences that may have an immediate effect on spouses, while also playing a role in their financial situations for years to come. Some tax-related issues that may need to be addressed during divorce include:

  • Tax deductions and credits - Divorcing spouses will need to determine how different types of deductions will be allocated. Only one parent will be able to claim a child as a dependent, and a divorce settlement should specify which parent will claim which child in which years. Spouses who are business owners may also need to address the allocation of deductions for business losses or expenses.
  • Property division - Property transferred between spouses as part of a divorce settlement will generally not be subject to taxes. However, if certain marital assets are sold during a divorce, such as investments or real estate, capital gains taxes may apply, and spouses should be sure to understand how they will share the liability for these taxes.
  • Retirement accounts - If funds in 401(k) or IRA accounts are transferred between spouses, this could result in taxes and penalties for early withdrawal. However, this can be avoided through the use of a Qualified Domestic Relations Order (QDRO).

Tax Liability for Divorced Spouses

When a couple files a joint tax return, "joint and several liability" will apply to taxes, penalties, or interest related to that return. This means that the IRS can hold either spouse liable for 100% of the amount due. While a divorce settlement or judgment may state that one spouse is responsible for paying certain tax liabilities, the IRS can disregard these orders and seek repayment from either or both parties. These types of tax debts may arise from a joint tax return filed prior to a couple's divorce or from tax audits that examine tax returns filed while a couple was married.

Fortunately, a person may receive innocent spouse relief in which they will not be liable for tax debts that were attributable to errors made by their spouse on a tax return. These errors may include failing to report income correctly or claiming improper deductions or tax credits. To qualify for innocent spouse relief, a person will need to show that they did not know or did not have reason to know about their spouse's understatement of the taxes owed. If a person does not qualify for innocent spouse relief, they may be eligible for separation of liability relief, in which the taxes owed will be allocated between the spouses. A person may also qualify for equitable relief if it would be unfair for them to be held liable for taxes owed, such as in situations involving abuse or financial control committed by their ex-spouse. Injured spouse relief may also be available if a person's share of a joint tax refund was applied to taxes or debts owed by their ex-spouse.

Let Us Help With Divorce Tax Issues in South Texas

At the Tax Liability Consultants of San Antonio and South Texas, we can advise you on how to address tax-related issues during your divorce, and we can assist with tax return preparation and help you avoid potential tax liabilities. If the IRS is seeking payment from you related to your and your ex-spouse's joint tax returns, we can make sure you follow the correct steps to receive innocent spouse relief or injured spouse relief. To learn more about how we can assist with divorce-related tax issues, contact us and set up a complimentary consultation by calling 210-382-9015. We provide tax help to divorcing and divorced spouses in South Texas, including Corpus Christi, San Antonio, and The Alamo City.

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