TaxCalc14 Seminar

With so many seminars, you learn some great stuff but then when you get back to the office you aren't able to immediately apply that information and so you forget what you learned.

This was not the case with the TaxCalc14 Seminar I attended this week, which was hosted by the Collaborative Family Law Council of Wisconsin and presented by Grant Zielinski of Divorce Financial Solutions and Attorney Dan Cross of Perterson, Berk & Cross, S.C.  In the just the first two days back in the office, I spent hours using the tools provided and demonstrated at this seminar.  It was by far the best training I have ever attended.

Before attending this seminar the extent of my experience with Divorce Financial Solutions TaxCalc14 spreadsheets was only with child support and maintenance calculations.  This week I made good use of their QDRO Estimate tool (to figure out tax consequences of distributions from a retirement account received through a QDRO), property division worksheet, and Wage Stub Calculator in addition to figuring maintenance and child support.

For any attorney (or support staff) not already using these tools, I encourage you to check them out and the best part is that they can be downloaded for free from Divorce Financial Solutions's website.

The IRS does not care what you put in your MSA

Contrary to what many people think, from a reliable source (an IRS Revenue Agent), I can assure you that the IRS will not spend time reading nor following the terms of a Marital Settlement Agreement or other family court order.

They don't care if the husband is solely responsible for the back taxes; if they can't collect from the husband, they will go after they wife.  They don't care if the mother is supposed to be able to claim the child as a dependent; if dad claims the child too, they will look at who provided more for the child (had the child in their care more of the time, spent more money on the care of the child, etc.).

For this reason, it is absolutely critical that you include language in the MSA that can be enforced by the Court should the IRS or state Department of Revenue (or any third party) try to collect from the other party.  Some options I have seen include a hold open on maintenance for the purpose of enforcing the obligations of either party or the ability to ask the Court for an increase (or decrease in the case of the payee failing to meet his or her obligations) in maintenance to cover same.

Taxes and Teachers

Click on this link to read Professor James Edward Maule's blog post from today entitled Taxes and Teachers.  Professor Maule's blog MauledAgain discusses a variety of tax topics and how they affect real people.  Even though I am not in the tax field at all, I enjoy reading his blog on occasion.  As a former teacher, this post really hit home.  I have boxes and boxes of stuff in my basement that I purchased for my classroom to enhance student learning and those boxes don't include all the stuff that was not reusable.  So many people are quick to bash teachers and the excessive salaries and benefits they supposedly receive without understanding the entire picture.  Each year schools are cutting the budgets for classroom supplies to the point where there is almost no budget for that.  One teacher I spoke to last spring stated that she was buying her own copy paper to print student materials because the school only provided enough for a few months of the school year!

Taxes - Married filing separately

I learned something new yesterday.  As a common law state, in Wisconsin, married couples can file taxes as married filing separately and choose to each file half of each other's income.  If one party decides to file that way, both parties must file that way.  This means that if one party earns $100,000 a year and the other party earns $10,000 a year, then both parties would claim $55,000 of income on their taxes.  The party only earning $10,000 would likely find it VERY difficult to come up with all the tax that would be due especially if the parties are separated or going through a divorce.  So this is something that really needs to be thought through before court orders specify how the parties will file their taxes.

Be wary of technology without understanding the principles behind it

So a while back my Dad got a GPS unit for hiking and he has started using it a little for driving as well. The other day I asked him if he thought that people had become so dependent on GPS to get them where they are going that they were losing their direction skills and ability to read a map. His response was that even if they are, it isn't a big deal. And he compared it to the dependence on calculators which I disagreed with touting several examples of when I have needed to be able to do math in my head or understand the principles behind what my calculator was doing to realize that my calculator had not given me an answer that made sense with what I was trying to do.

Yesterday, I traveled with my in-laws who had recently purchased a GPS unit and had been just raving over it. To prepare for our trip, my father-in-law just wrote down the addresses of the places we were going. So we head off after typing in the first address and I listen as they try and figure out the route the GPS might take us, a route, I would not have chosen as it spent little time on freeways and significant time on roads littered with stop lights every half mile. Then as we continue to another place, the address is typed in, and the address could not be found (or maybe it was not typed in accurately) so we had to choose an address it suggested for us hoping it was something close. It then sent us on back roads, making turn after turn. And all the time not sure of where it was sending us. Add to that all the fumbling with the GPS unit as the driver is driving made worse by the fact that no one was all that familiar with the unit yet.

So then I wake up this morning and there are two blog posts in my Google Reader and after reading them both, I couldn't help but laugh at how appropriately timed they were.

The first post was by Prof. James Edward Maule in his blog "MauledAgain". He primarily writes about tax law. Today's post was entitled "Why the Nation Needs Tax Education." First he discusses several posts with citizens highly debating whether Obama would have to pay federal income tax on his Nobel Peace Prize award and how the answer was so clear in federal tax code yet people had no understanding of it even when made available to them. However, then in the 10th paragraph he mentions my whole point of dependence on technology when he blames the lack of understanding of the federal tax system on tax preparation software and tax preparers (who usually use tax preparation software as well). US citizens have become so accustomed to TurboTax and the like that just asks us questions and does our taxes for us to the point where so many would not be able to figure their taxes out by hand even with all the resources necessary.

The second post was by Tom Kuntz in his New York Times blog "Idea of the Day". His post today was titled "Can GPS Help Your Brain Get Lost?" and discussed how GPS may eventually contribute to dementia as the dependence on it eliminates the use of the skill that gives us direction and allows us to understand abstract concepts spatially. Which makes perfect sense to me as I watched the GPS tell us to make turn after turn without any need to understand where locations were located.

So my advice to everyone is to be wary of technology that replaces your need to think as it may affect you greatly in the future.

Nothing in life is free

Click on the title to see the blog post by MauledAgain that sparked this post.

Nobody likes taxes and in conversations with people around me, I constantly hear complaints about Wisconsin, the state I live in, being among the top states that have the highest overall taxes. And it is true. But what all of those complaining seem to forget is that we get a lot for our taxes here. Our education system is top notch. Our roads are actually pretty decent despite all the construction that is prevelant in any state and despite how hard winters are on the roads. Wisconsin has an unspoken "dry pavement" rule in the winter making our roads far easier to get around on after winter storms than even our neighbor Minnesota. These among other things are the result of us paying a little higher taxes.

I'm not saying that we need to all feel good about paying lots of taxes or even agree with it. But I think we need to remember that we need to pay for what we want. Nothing in life is free.