www.qns.com I LIC COURIER I OCTOBER 2017 43
TAX TIPS
Divorce or Separation
May Affect Taxes
BY JOHN SAVIGNANO, CPA
Taxpayers who are divorcing or recent-ly
divorced need to consider the impact
divorce or separation may have on their
taxes. Alimony payments paid under
a divorce or separation instrument are
deductible by the payer, and the recip-ient
must include it in income. Name
or address changes and individual retire-ment
account deductions are other items
to consider.
IRS.gov has resources that can help
along with these key tax tips:
• Child Support Payments are not
Alimony. Taxpayers can deduct alimo-ny
paid under a divorce or separation
decree, whether or not they itemize deduc-tions
on their return. Taxpayers must file
Form 1040; enter the amount of alimo-ny
paid and their former spouse’s Social
Security number or Individual Taxpayer
Identification Number.
• Deduct Alimony Paid. Taxpayers
should report alimony received as income
on Form 1040 in the year received.
Alimony is not subject to tax withhold-ing
so it may be necessary to increase the
tax paid during the year to avoid a penalty.
To do this, it is possible to make estimated
tax payments or increase the amount of tax
withheld from wages.
• Report Alimony Received. Taxpayers
should report alimony received as income
on Form 1040 in the year received.
Alimony is not subject to tax withhold-ing
so it may be necessary to increase the
tax paid during the year to avoid a penalty.
To do this, it is possible to make estimated
tax payments or increase the amount of tax
withheld from wages.
• IRA Considerations. A final decree
of divorce or separate maintenance agree-ment
by the end of the tax year means tax-payers
can’t deduct contributions made to
a former spouse’s traditional IRA. They can
only deduct contributions made to their
own traditional IRA.
• Report Name Changes. Notify the
Social Security Administration (SSA) of
any name changes after a divorce. The
name on a tax return must match SSA
records. A name mismatch can cause prob-lems
in the processing of a return and may
delay a refund.
Moving Expenses May Be Deductible
Taxpayers may be able to deduct cer-tain
expenses of moving to a new home
because they started or changed job loca-tions.
Use Form 3903, Moving Expenses, to
claim the moving expense deduction when
filing a federal tax return.
Home means the taxpayer’s main home.
It does not include a seasonal home or
other homes owned or kept up by the tax-payer
or family members. Eligible taxpay-ers
can deduct the reasonable expenses
of moving household goods and person-al
effects and of traveling from the former
home to the new home.
Reasonable expenses may include the
cost of lodging while traveling to the new
home. The unreimbursed cost of packing,
shipping, storing and insuring household
goods in transit may also be deductible.
Who Can Deduct Moving Expenses?
1. The move must closely relate to the
start of work. Generally, taxpayers can
consider moving expenses within one year
of the date they start work at a new job
location.
2. The distance tests. A new main job
location must be at least 50 miles far-ther
from the employee’s former home
than the previous job location. For exam-ple,
if the old job was three miles from the
old home, the new job must be at least 53
miles from the old home. A first job must
be at least 50 miles from the employee’s
former home.
3. The time tests. After the move, the
employee must work full-time at the new
job for at least 39 weeks in the first year.
Those self-employed must work full-time
at least 78 weeks during the first two years
at the new job site.
Different rules may apply for members
of the Armed Forces or a retiree or survi-vor
moving to the United States.
Here are a few more moving expense
tips from the IRS:
• Reimbursed expenses. If an employ-er
reimburses the employee for the cost
of a move, that payment may need to be
included as income. The employee would
report any taxable amount on their tax
return in the year of the payment.
• Nondeductible expenses. Any part of
the purchase price of a new home, the cost
of selling a home, the cost of entering into
or breaking a lease, meals while in transit,
car tags and driver’s license costs are some
of the items not deductible.
• Recordkeeping. It is important that
taxpayers maintain an accurate record of
expenses paid to move. Save items such as
receipts, bills, canceled checks, credit card
statements, and mileage logs. Also, taxpay-ers
should save statements of reimburse-ment
from their employer.
• Address Change. After any move,
update the address with the IRS and the
U.S. Post Office. To notify the IRS file Form
8822, Change of Address.
Avoid scams. The IRS does not initi-ate
contact using social media or text mes-sage.
The first contact normally comes in
the mail.
John Savignano is a partner with
Savignano Accountants & Advisors locat-ed
at 47-46 Vernon Blvd., Second Floor, in
Long Island City. If you have any ques-tions
or require additional information,
please call John at 718-707-0955.
