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The Effect of Alimony on Your Withholding Tax
By Darrin Mish of Law Offices of Darrin T. Mish, P.A.
The Effect of Alimony on Your Withholding Tax It seems that the IRS makes its presence known in everything you do in your life. Whether you get married, get divorced, have a baby, get a new job, buy a house or purchase an energy-efficient car, you will always have tax implications for these actions. In this article, you will discover how alimony can cause your withholding tax to decrease and how you can get IRS assistance on this matter. Paying federal income taxes can be done through any of the two: estimated tax or withholding tax. The self-employed usually utilize the estimated tax. Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well,” describes the IRS. Employees, on the contrary, settle their taxes by withholding, meaning their employers withhold income tax from their monthly salaries. Whether taxes are taken from your job or other forms of income like pensions, gambling winnings, bonuses and commission, they will always be reflected under your name. Your salary and specific data in your W-4 (including details on whether you are withholding at the single rate or the lesser married rate, how many withholding allowances you can claim, and whether you want any additional income withheld) influence the amount that will be withheld from your paycheck. You can use the IRS Withholding Calculator for easier calculation of your withholdings. Alimony adjustment is one way of changing the amount that is withheld from your pay. To apply for this, you need to accomplish a new W-4 and forward it to your employer. All you need to do to avail of this is forward to your employer a newly-accomplished W-4. Alimony payments are considered as taxable income. Thus, you must fill out a new W-4 if you are receiving these so this will be reflected as an increase in your income. Otherwise, you might end up owing more taxes at the end of the year. On the contrary, paying for alimony entitles you to a tax reduction. However, it has to be paid in cash, through a check or through money order. If you directly pay certain bills in behalf of your ex-spouse, your expenses cannot be considered alimony. Tax deductions in the form of paying for alimony can be effected in your withholdings only if you have filled out a new W-4. Your life changes ---- and some circumstances change more drastically in a year's time. When they do come your way, do not forget to adjust the amount of income you have withheld from your paycheck. Darrin T. Mish is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He also spends a great deal of time traveling the nation providing training to attorneys, CPAs and Enrolled Agents on how to handle their toughest cases with the IRS. If you would like more information about his services please visit http://getirshelp.com. |
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