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#7
08-10-2004, 08:44 AM
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 Re: Divorce who pays tax? twc wrote: - quote - > Let's say $20,000 from a SEP IRA is withdrawn, and the IRA
If neither divorce attorney even considered the tax effects> is in the name of the husband. > In this case, that withdrawal becomes taxable as income. > If, in a divorce settlement $10,000 of that sum is given > over to the wife, then here is my question: > 1) Does the wife have to declare that sum as income and pay > corresponding tax? > 2) Can the husband deduct that amount given over to the > wife, from his own taxable income? > Thanks for helping! upon one party in tapping a source of income to otherwise comply with the property division, they should both be fired! This sort of question needs to be answered FIRST in the divorce settlement. In the absence of such: 1) No. She is receiving it incident to divorce, so she incurs no tax. 2) No. He is giving it in a transfer incident to divorce, so he incurs no loss nor gets a deduction. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#6
08-10-2004, 07:27 AM
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| Re: Divorce who pays tax? "Paul" <taxman[at]negia.net> writes: - quote - > Tell him to tell his attorney to look at a QDRO, or
In the name of simplification, QDRO's do not apply to IRAs.> Qualified Domestic Relations Order, in which the IRA (and > other pensions) can be separated between the spouses without > any current tax implications. Each would then pay tax on > their respected withdrawals. IRC 408(d)(6) covers splits incident to divorce. Phil Marti Topeka, KS << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#5
08-07-2004, 08:39 AM
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| Re: Divorce who pays tax? "twc" <bfry[at]mindspring.com> wrote: - quote - > Let's say $20,000 from a SEP IRA is withdrawn, and the IRA
Why must this be done as a taxable event? If so, it should> is in the name of the husband. > In this case, that withdrawal becomes taxable as income. > If, in a divorce settlement $10,000 of that sum is given > over to the wife, then here is my question: > 1) Does the wife have to declare that sum as income and pay > corresponding tax? > 2) Can the husband deduct that amount given over to the > wife, from his own taxable income? be taxable to the wife. Furthermore, this is not alimony it is a property settlement and not deductible by the husband. Sounds to me that someone is really screwing this up. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#4
08-07-2004, 08:39 AM
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| Re: Divorce who pays tax? twc wrote: - quote - > 1) Does the wife have to declare that sum as income and pay
Not if the transaction takes place the way you phrased it.> corresponding tax? Now, if the IRA is split in the divorce, the wife can end up with an IRA with $10K in it. If she then withdraws it, she would pay the tax. - quote - > 2) Can the husband deduct that amount given over to the
Not unless it is structured to be an alimony payment--and it> wife, from his own taxable income? sounds a *LOT* like a property settlement. In essence, you can get to the point where the wife pays the tax, but it's going to involve working with a professional who understands the tax implications of divorce and IRAs. -- Ed Zollars, CPA Phoenix, Arizona << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#3
08-07-2004, 08:20 AM
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| Re: Divorce who pays tax? "twc" <bfry[at]mindspring.com> writes: - quote - > Let's say $20,000 from a SEP IRA is withdrawn, and the IRA
No and no, assuming that none of this is considered alimony.> is in the name of the husband. > In this case, that withdrawal becomes taxable as income. > If, in a divorce settlement $10,000 of that sum is given > over to the wife, then here is my question: > 1) Does the wife have to declare that sum as income and pay > corresponding tax? > 2) Can the husband deduct that amount given over to the > wife, from his own taxable income? If hubby has an attorney who can walk and chew gum at the same time, hubby will be advised to just transfer the settlement part of the IRA, thus incurring no income or premature withdrawal penalty. See IRS Publication 590. Phil Marti Topeka, KS << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#2
08-07-2004, 08:01 AM
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| Re: Divorce who pays tax? "twc" <bfry[at]mindspring.com> wrote - quote - > Let's say $20,000 from a SEP IRA is withdrawn, and the IRA
If _he_ takes it out of _his_ SEP-IRA, then it is _his_ income.> is in the name of the husband. > In this case, that withdrawal becomes taxable as income. > If, in a divorce settlement $10,000 of that sum is given > over to the wife, then here is my question: > 1) Does the wife have to declare that sum as income and pay > corresponding tax? She wouldn't owe a dime of tax. Be very careful how this gets done. - quote - > 2) Can the husband deduct that amount given over to the
There isn't any deduction for property settlements in a> wife, from his own taxable income? divorce situation. Tell him to tell his attorney to look at a QDRO, or Qualified Domestic Relations Order, in which the IRA (and other pensions) can be separated between the spouses without any current tax implications. Each would then pay tax on their respected withdrawals. -- Paul A. Thomas, CPA taxman at negia.net << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#1
08-07-2004, 08:01 AM
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| Re: Divorce who pays tax? - quote - > Let's say $20,000 from a SEP IRA is withdrawn, and the IRA
Unless it is in the divorce decree, he has all the income> is in the name of the husband. > In this case, that withdrawal becomes taxable as income. > If, in a divorce settlement $10,000 of that sum is given > over to the wife, then here is my question: > 1) Does the wife have to declare that sum as income and pay > corresponding tax? > 2) Can the husband deduct that amount given over to the > wife, from his own taxable income? and nothing to offset it. Helen, EA in PA 50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure October 1 to October 3, 2004 Donate on-line at www.msandyou.org << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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08-07-2004, 07:42 AM
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| Re: Divorce who pays tax? - quote - > Let's say $20,000 from a SEP IRA is withdrawn, and the IRA
***No> is in the name of the husband. > In this case, that withdrawal becomes taxable as income. > If, in a divorce settlement $10,000 of that sum is given > over to the wife, then here is my question: > 1) Does the wife have to declare that sum as income and pay > corresponding tax? - quote - > 2) Can the husband deduct that amount given over to the
***Only if it were in the form of alimony.> wife, from his own taxable income? If the IRA had been turned over to you, it is you who would have paid the tax. As it is, your ex made a cash settlement to you from a distribution which he took. The only deduction the ex could have is if the money were turned over to you in the form of alimony. "Jack" - John H. Fisher - TaxService[at]aol.com Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html Where Ignorance is bliss, 'tis folly to be wise!=  << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
08-05-2004, 07:12 PM
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| Divorce who pays tax? Let's say $20,000 from a SEP IRA is withdrawn, and the IRA is in the name of the husband. In this case, that withdrawal becomes taxable as income. If, in a divorce settlement $10,000 of that sum is given over to the wife, then here is my question: 1) Does the wife have to declare that sum as income and pay corresponding tax? 2) Can the husband deduct that amount given over to the wife, from his own taxable income? Thanks for helping! << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| divorce, pays, tax |
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