BONNIE L. MACKEY, CPA, *CSEP, MBA, AEP®*CERTIFIED SPECIALIST IN ESTATE PLANNING

LEVIN, SILVEY, ZELKO & MACKEY, P.A.Tax Considerations

When Dealing with Divorcebonnie@lszcpa.com

954-985-8808

CONSIDERATIONS:Is it possible to financially prepare for divorce?• Prepare an inventory of your financial

situation• Prepare a list of all assets, whether

joint or separate including• Know exact quantity of salaries• Obtain all papers regarding

insurance,• Make a list of debts owed jointly and separately

A plan is crucial -Aids in determining how debts

accumulated will be paid off and give you a look at info to be divided

Last 2-3 years’ tax returnsIncluding misc. income by you/spousePensions and other retirement benefitsIncluding mortgage, CC debt, auto

loans and other liabilities

CONSIDERATIONS CONTINUED

What are the tax implications?• Child Support• Alimony – separate from child

support• Property Settlements• Transfers of assets between

spouses w/built in gains or losses

• **caution on splitting FMV equally and not considering cost basis…

Individual returns will be filed vs. MFJ or MFS….

Not taxable or deductibleIS taxable and deductibleNot taxable IF in accordance

w/divorce or separation agreementNot taxable and has carryover cost

basis, not FMV basis for future sale**

…lower basis = higher taxable gain on future sale

CONSIDERATIONSCONTINUED

What happens to retirement funds?

• Needs to be in accordance with qualified domestic relations order or other court order for an IRA…

• Once allocated, then withdrawals begin….

• Initial separation of funds…

Then separated are NON-taxable IF the funds stay in retirement account or IRA

Taxed to recipient upon withdrawalNon-taxable distribution to

establish separate accounts

CONSIDERATIONS CONTINUED

Deductions• Is the cost of divorce a deduction?• Fees paid for income or estate tax

advice due to the divorce…• Dependency exemption

• Can be negotiated in agreement• House selling expenses

Typically No, but….May be deductible, but subject to

2% of AGI under misc. itemized deductions

Typically custodial parent has right If written, non-custodial may claim

Against Sales proceeds to reduce gain (ie. 500k vs. 250k exclusion)

FOR YOUR TAX RX, WE SPECIALIZE &SERVICE OUR CLIENTS IN ALL FACETS OF:

•Tax Planning•Financial Statements•Representation with the IRS &

Florida Dept. of Revenue

•Projections & Budgets•Estate & Trust Accounting/Tax•Guardianship Accounting

Levin, Silvey, Zelko & Mackey, P.A.Certified Public Accountants

Mitchell H. Silvey, CPARobert A. Zelko, CPA

Bonnie L. Mackey, CPA, *CSEP, MBA, AEP®*Certified Specialist in Estate Planning

2699 Stirling Road, Suite B-205, Hollywood, Florida 33312-6543954.985.8808 website: ‘www.lszcpa.com’

For all of Your Accounting & Tax Needs,Don’t Be Wacky, Call…..Bonnie Mackey!