April 2, 2019

Avoid Tax Surprises – Adjust your W-4!

tax imageIt’s important for divorcees to review and adjust their W-4 payroll withholding or start to make quarterly tax estimates following their divorce. Often, they are so relieved to have reached settlement, they fail to think about these housekeeping items.

If divorced in 2018, this is especially important if transferring taxable spousal maintenance. The payor spouse can likely change their payroll withholding to increase their net income. The payee spouse will need to withhold additional tax dollars on their salary or make quarterly estimated tax payments, to account for taxes on the spousal maintenance payments received.

If the payor spouse doesn’t adjust their W-4, they may not be able to meet their budget during the year and would probably receive a large tax refund when taxes are filed. If the payee spouse doesn’t adjust their W-4 or start quarterly estimated taxes, they could have a large tax liability when they file their return.

Even if there isn’t taxable spousal maintenance, individuals still may need to adjust their withholding. Things that can impact taxes and often require an adjustment are a change in their filing status, pre- tax payroll deductions (retirement contributions, health savings account, health insurance premiums), and itemized deductions such as real estate taxes and mortgage interest.

Making these adjustments now will help cash flow match what was projected during the divorce process and save the headache later of a tax surprise.

Amy WolffABOUT THE AUTHOR
Amy Wolff
AJW Financial, Inc.

Amy Wolff’s clients describe her as a financial educator and coach. She listens to their diverse concerns and guides them through life’s most stressful transitions toward confident financial literacy and independence. By remaining accessible and open to any question, Amy helps clients avoid pitfalls and make decisions today that align well with their plans long-term. Her approach to personalized financial guidance has given countless clients a non-judgmental place to make well-reasoned financial decisions for their futures and their loved ones.

Amy is a CERTIFIED FINANCIAL PLANNER™ professional (CFP®) and holds the Certified Divorce Financial Analyst® (CDFA®) designation. Feel free to learn more at www.ajwfinancial.com

Amy Jensen Wolff, CFP®, CDFA®
3300 Edinborough Way, Suite 550
Edina, MN 55435
Phone: 952-405-2000
www.ajwfinancial.com

For a comprehensive review of your personal tax situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give personal legal or tax advice.

Registered Representative offering securities and advisory services through Cetera Advisor Networks LLC, member FINRA/SIPC, a Broker-Dealer and a Registered Investment Advisor. Additional advisory services offered through AdvisorNet Wealth Management. Cetera is under separate ownership from any other named entity.

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February 18, 2019

Notable 2019 Contribution Limits

Categories: Money and FinancesTaxes

As we move into 2019, it’s helpful to know contribution limits and Social Security changes. Individual Retirement Accounts: The annual contribution limits for traditional and Roth IRA’s have increased to $6,000, a boost of $500 over 2018 contribution limits. The catch-up Continue reading…

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February 10, 2019

Wouldn’t You Rather Divorce in a Conference Room Than a Courtroom

Categories: Collaborative LawDivorce

Wouldn’t it be great if families could complete their divorce in a conference room rather than a courtroom? That’s the thinking behind the Collaborative Process and what makes the Collaborative Law Institute of Minnesota so helpful to divorce professionals and Continue reading…

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February 3, 2019

Tax Planning – Bonuses Gone Bad!

It is important to review and discuss tax planning for the year in which a divorce was completed, especially for high earning individuals who receive incentive compensation and plan to be divorced by December 31, 2018. As part of the Continue reading…

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January 27, 2019

3 Life Insights from the Jeff and MacKenzie Bezos Divorce

One of the reasons that divorce is such a challenging life transition is its public nature. A couple might keep their problems private as they try to work through them. But if a rift opens that can’t be mended, the Continue reading…

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January 20, 2019

Splitting Investment Income on Tax Returns

When a joint investment account is divided, the financial institute will use only one Social Security number to report the earnings and thus only one 1099 will be issued for that account. For example, following their divorce, Dick and Jane Continue reading…

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December 1, 2018

Holiday Presence

Who would ever ask for a two month supply of elevated cortisol and high anxiety in their Christmas stocking!  Yet for many, the holiday season adds to rather than relieves stress as parents feel obliged to layer Hallmark fantasies about Continue reading…

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October 22, 2018

Health Insurance Season

Categories: Money and Finances

It’s that time of year again, when the trees become bare and days grow short, that one’s thoughts turn to health insurance. That’s right, the open enrollment window for renewing your existing health insurance plan or shopping for a new plan Continue reading…

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August 18, 2018

Reduced Fee Divorce – For Couples Who Want a Respectful, Collaborative Divorce

Categories: Collaborative LawDivorce

If you want a respectful, affordable and uncontested divorce without breaking the bank, you’ll want to consider a Collaborative Divorce. Do you have a reasonable level of trust and ability to work together with your spous if you have the Continue reading…

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July 15, 2018

How Can a Mortgage Professional Help With Divorce?

It goes without saying, but I’ll say it anyway…divorces are complicated! There are many questions that an experienced mortgage professional can help answer before you finalize your divorce. For example: Can one of us afford the family home or do Continue reading…

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