How Do You Determine Your Filing Status for Income Taxes?

How Do You Determine Your Filing Status for Income Taxes?

by | Nov 2, 2016 | Alabama, Divorce, Family Law, Finances, Mobile, Mortgage, Significant Decisions

By: Brandi Morgan, CPA

It is very important to select the correct filing status as this will impact the amount of your standard deduction and your tax rate. You may fall into more than one category, so you should choose the one the produces the lowest overall tax. An individual may be single, a surviving spouse, head of the household, married filing jointly, or married filing separately. Filing status is determined on the last day of the tax year.

The basis standard deduction amounts for 2016 are:

  • Single 4,050
  • Married filing jointly and surviving spouses 12,600
  • Married filing separately 6,300
  • Head of Household 9,300

You are considered single for the whole year if on the last day of the tax year, you are unmarried or legally separated under a divorce or separate maintenance agreement. You are considered unmarried if you and your spouse did not live in the same household for the last six months of the tax year. If your home was the main home for a qualifying child or relative and you provided more than half the cost of keeping up your home for the tax year, you are eligible to file as head of household instead of single which provides a higher standard deduction and lower tax rates.

A single taxpayer qualifies as a surviving spouse during the two years following the death of a spouse if the household is maintained for a dependent child and you do not remarry. Tax brackets for surviving spouses are more favorable than filing single.

Married individuals may opt to file jointly or separately even if only one spouse had income. In most situations, it is advantageous to file a joint return due to higher deductions and lower tax rates; however, there are special circumstances where filing separately produces a lower tax bill. It is advisable to calculate your tax both ways and use the filing status that yields the lowest aggregate tax. Considerations other than tax savings should also be considered. If you believe your spouse is not reporting all of his or her income or you do not want to be held responsible for any taxes due because your spouse did not have enough tax withheld or pay enough estimated tax, filing separately may be ideal.

If you are unsure which status applies to your situation, consult your tax advisor.

Brandi Morgan is a CPA and Manager at Wilkins, Miller, Hieronymus LLC, Certified Public Accountants and Advisors. She can be reached at wilkinsmiller.com or 251-410-6700. Her office is located at 41 West Interstate 65 Service Road North, Suite 400, Mobile, Alabama 36608.

Warning Signs of Child Abuse and Neglect

Warning Signs of Child Abuse and Neglect

by | Oct 25, 2016 | Children, Divorce, Family, Family Law, Mobile, Uncategorized

Child abuse and neglect is rampant, and we all have a duty to protect children. The US Department of Health and Human Services has published the following list to aid the public in recognizing signs of abuse and neglect in children:

The Child

1. Shows sudden changes in behavior or school performance
2. Has not received help for physical or medical problems brought to the parents’ attention
3. Has learning problems (or difficulty concentrating) that cannot be attributed to specific physical or psychological causes
4. Is always watchful, as though preparing for something bad to happen
5. Lacks adult supervision
6. Is overly compliant, passive, or withdrawn
7. Comes to school or other activities early, stays late, and does not want to go home

The Parent

1. Shows little concern for the child
2. Denies the existence of—or blames the child for—the child’s problems in school or at home
3. Asks teachers or other caregivers to use harsh physical discipline if the child misbehaves
4. Sees the child as entirely bad, worthless, or burdensome
5. Demands a level of physical or academic performance the child cannot achieve
6. Looks primarily to the child for care, attention, and satisfaction of emotional needs

The Parent and Child

1. Rarely touch or look at each other
2. Consider their relationship entirely negative
3. State that they do not like each other

For more information on child abuse and neglect, visit https://www.childwelfare.gov/topics/can/identifying.

Talking With Your Children About Divorce

Talking With Your Children About Divorce

by | Sep 26, 2016 | Alabama, Child Support, Children, Custody, Divorce, Family, Family Law, Legal Advice, Mobile, Significant Decisions

Divorce can be a difficult situation for all parties involved, especially the children. Many children are confused about the situation and do not understand why their parents are separating.

Although this can be difficult, talking with children is a crucial part of the puzzle when you are dealing with a divorce. Parents often put off talking to their children about divorce because they are unsure how to explain such a complex situation. But a delay in talking with your children can actually make the divorce more difficult for the children in the long run.

When children are suddenly surprised with the divorce of their parents, they go through a great deal of emotions. Many feel as if it is their fault that their parents are separating, while many begin acting out and become angry with others. This is another reason why explaining to your children why you and your spouse are divorcing is very important.

To help you make this process easier, here are six strategies for talking with your kids about divorce. While it may seem beyond your capabilities, just remember that there are ways to make it easier on both yourself and your children.

  1. Talk to your children with your spouse, if possible. If you present a united front to your children, they may not be as confused about the situation.
  2. Carefully, and appropriately, explain the reasons for the divorce. Make sure whatever you tell your children is appropriate to their age and maturity level.
  3. Make it clear that the divorce is not the child’s fault. Many children struggle with guilt during their parent’s separation. Be sure to reiterate that this is not their fault.
  4. Maintain eye contact and a calm attitude. In order for your children to believe the situation, you must remain calm and truthful. If you begin to get angry, the child may become angry and upset as well.
  5. Avoid blaming your spouse. Although you will have personal issues with your spouse, they are still the child’s parent. Do not put down your spouse to the child. This will only create more stress on the child, making them feel like they should have to pick sides when they should not.
  6. Allow plenty of time for children to ask questions. They will have many questions as to why this is happening and what is going to happen in the future, and they deserve to have those questions answered to your fullest abilities.

Remember, every family is different. Talking about your divorce with your children can be difficult, but will be a critical step forward in the healing process.

October is Domestic Violence Awareness Month

October is Domestic Violence Awareness Month

by | Sep 26, 2016 | Alabama, Children, Family, Mobile

Domestic Violence is an issue that knows no racial, cultural, gender or socioeconomic boundaries. Chances are, we all know someone whose life has been effected by domestic violence. In October 1987, the first Domestic Violence Awareness Month was observed. That same year marks the initiation of the first national domestic violence toll-free hotline. The purpose of DVAM is to mourn those who have died as a result of domestic violence, celebrate survivors, and connect those working to end domestic violence.

Here are some statistics from the National Coalition Against Domestic Violence:

NATIONAL STATISTICS

  • Every 9 seconds in the US, a woman is assaulted or beaten
  • On average, nearly 20 people per minute are physically abused by an intimate partner in the United States. During one year, this equates to more than 10 million women and men
  • 1 in 3 women and 1 in 4 men have been victims of [some form of] physical violence by an intimate partner within their lifetime
  • 1 in 5 women and 1 in 7 men have been victims of severe physical violence by an intimate partner in their lifetime
  • 1 in 7 women and 1 in 18 men have been stalked by an intimate partner during their lifetime to the point in which they felt very fearful or believed that they or someone close to them would be harmed or killed
  • On a typical day, there are more than 20,000 phone calls placed to domestic violence hotlines nationwide
  • The presence of a gun in a domestic violence situation increases the risk of homicide by 500%.
  • Intimate partner violence accounts for 15% of all violent crime
  • Women between the ages of 18-24 are most commonly abused by an intimate partner
  • 19% of domestic violence involves a weapon
  • Domestic victimization is correlated with a higher rate of depression and suicidal behavior
  • Only 34% of people who are injured by intimate partners receive medical care for their injuries

RAPE

  • 1 in 5 women and 1 in 71 men in the United States has been raped in their lifetime
  • Almost half of female (46.7%) and male (44.9%) victims of rape in the United States were raped by an acquaintance.
  • Of these, 45.4% of female rape victims and 29% of male rape victims were raped by an intimate partner

STALKING

19.3 million women and 5.1 million men in the United States have been stalked in their lifetime.1 60.8% of female stalking victims and 43.5% men reported being stalked by a current or former intimate partner

HOMICIDE

A study of intimate partner homicides found that 20% of victims were not the intimate partners themselves, but family members, friends, neighbors, persons who intervened, law enforcement responders, or bystanders
72% of all murder-suicides involve an intimate partner; 94% of the victims of these murder suicides are female

CHILDREN AND DOMESTIC VIOLENCE

1 in 15 children are exposed to intimate partner violence each year, and 90% of these children are eyewitnesses to this violence

ECONOMIC IMPACT

  • Victims of intimate partner violence lose a total of 8.0 million days of paid work each year
  • The cost of intimate partner violence exceeds $8.3 billion per year
  • Between 21-60% of victims of intimate partner violence lose their jobs due to reasons stemming from the abuse
  • Between 2003 and 2008, 142 women were murdered in their workplace by their abuser, 78% of women killed in the workplace during this timeframe

PHYSICAL/MENTAL IMPACT

Women abused by their intimate partners are more vulnerable to contracting HIV or other STI’s due to forced intercourse or prolonged exposure to stress

Studies suggest that there is a relationship between intimate partner violence and depression and suicidal behavior.7
Physical, mental, and sexual and reproductive health effects have been linked with intimate partner violence including adolescent pregnancy, unintended pregnancy in general, miscarriage, stillbirth, intrauterine hemorrhage, nutritional deficiency, abdominal pain and other gastrointestinal problems, neurological disorders, chronic pain, disability, anxiety and post-traumatic stress disorder (PTSD), as well as noncommunicable diseases such as hypertension, cancer and cardiovascular diseases. Victims of domestic violence are also at higher risk for developing addictions to alcohol, tobacco, or drugs.

If you or someone you know needs help, please reach out to one of our excellent local resources:

Penelope House (Mobile County)
www.penelopehouse.org
24 Hour Crisis Hotline: 251-342-8994

The Lighthouse (Baldwin County)
www.abeacon.org
24 Crisis Hotline: 251-947-6008 or 800-650-6522

Penelope House has a number of events scheduled for DVAM. Coming up on October 26th, if you dine at Five Guys Burgers on Airport Boulevard, a portion of all sales will be donated to Penelope House. See their website for more information on events.

Divorce and the Family Business

Divorce and the Family Business

by | Sep 11, 2016 | Alabama, Division of Assets, Divorce, Family, Family Law, Finances, Legal Advice, Mobile, Significant Decisions, Uncategorized

Divorce and the Family Business: What happens to the Family Business when you get divorced?

The business you and your spouse co-founded and run together is thriving. Your marriage? That’s another matter. Many people put off filing in situations like this because they fear that it will soon mean the end of the company. It does not have to be that way, especially if your lawyer is sensitive to the fact that the two still need to cooperate and that it will take a quite careful approach in figuring out severing some financial ties, but also having to keep the business alive.

A Census Bureau estimate from 2007 found that nearly 4 million businesses in the U.S. are operated by husband and wife. With a 50% divorce rate, divorce clearly affects a lot of small businesses. Overall, there is no question that it can be a very difficult situation involving two people. Though it may initially seem like a battle, it can work if you work together. Research says that it all depends on the individual couple, but also how the company runs and the skills of your divorce attorneys.

Some things to keep in mind:

Respect each other- this can be hard, especially if the reasons for the split were particularly painful. In some cases, if there isn’t any trust left between the two then there isn’t any respect, and it is probably be best to cut off communication.

Know when to get help- Unlike a lot of separated couples, the ones that operate a business together have to see each other a lot, even after the divorce is finalized.

Create agreement-This is a very important legal step that many couples haven’t though out when they found the business together. The agreement explains what will occur in the event someone wants to sell.

Sit down and discuss the situation with your employees- They will know what is happening, and what you don’t want to happen is for them to choose whose side to be on. Choosing sides can always slow the process down so its always in each party’s best interest to try to get along.