WOULD you fake a divorce to save income taxes? I don’t advise it but let’s discuss it anyway – benefits this week and drawbacks next week.
Medicaid for nursing home:
A sick spouse in need of nursing home care might have too much in assets to qualify for Medicaid. You can slowly draw down your assets, deplete your retirement accounts and pay down the bills. There might be an alternative – divorce that will allow the sick partner to have little assets and qualify for Medicaid.
Financial aid for a child:
Divorce may help your child qualify for financial aid. A custodial parent who is responsible for filling out an Application for Federal Student Aid, has lower income and lower assets, could get more federal aid for college than a married couple.
Marriage penalty:
High-earning couples could end up paying more taxes if they file jointly.
There’s a so-called marriage penalty that causes them to pay more if their taxable income is in the 37% tax bracket. Filing as single or heads of household can place each in a lower tax bracket.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.
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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at [email protected].