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Filing Taxes After a Divorce in 2024: Navigating Alimony and Child Support Tax Rules

In the U.S., alimony—also known as spousal support—is considered taxable income for the recipient and a tax deduction for the payer. In simple terms, the person receiving alimony reports it as income and pays taxes on it, while the payer can deduct these payments on their tax return. However, the rules around alimony tax deductions can be complex, so it’s always wise to consult a tax professional or refer to the latest IRS guidelines.

Tax Treatment of Alimony

Alimony refers to payments made to a separated or ex-spouse under a divorce or separation agreement.

To qualify as alimony for tax purposes, the payments:

📌 Must be in cash and paid to or on behalf of a spouse or ex-spouse.
📌 Must be required by a divorce decree, written separation agreement, or support decree.
📌 Cannot be labeled as child support.
📌 Are only valid if the spouses live separately after the agreement is signed—sharing a household disqualifies the alimony deduction, even if living in separate parts of the home.
📌 Must end upon the death of the recipient.
📌 Cannot be dependent on the status of a child (e.g., payments that stop when a child turns 18 do not qualify as alimony).

These payments can cover more than just support; they can include property rights, as long as they meet these criteria. Payments don’t have to be periodic, but be mindful of rules about front-loading, which can trigger “recapture” provisions. Even if the payments meet all alimony requirements, the couple can agree that the payments aren’t alimony, and this agreement will be honored for tax purposes.

💡 Divorce Agreements Completed Before the End of 2018

For divorces finalized before 2019, the recipient of alimony must report it as income, and the payer can deduct it. The recipient can also treat the alimony as earned income for IRA contributions. To ensure accuracy, the IRS requires the payer to include the recipient’s Social Security number on the tax return, allowing the IRS to match the amounts reported by both parties.

💡 Divorce Agreements Completed After 2018

For divorces finalized after 2018, alimony is no longer deductible by the payer nor taxable for the recipient. As a result, the recipient cannot treat alimony as earned income for IRA contributions. This rule also applies to any divorce or separation agreements executed before January 1, 2019, but modified after 2018, provided the modification specifies that the new tax rules apply.

Still Wondering How This Affects You?

Navigating alimony, child support, and divorce-related tax issues can be tricky, especially with the evolving tax laws. If you’re dealing with a divorce and unsure how these changes might impact your tax situation, reach out to us. We’re here to help you get the most out of your financial future.

Moving to Austin, Texas? The Tax Tips You Need to Know

If you’re eyeing Austin, Texas, as your next home—whether for retirement, a job relocation, or just a change in scenery—here’s the lowdown on what to expect tax-wise in 2024.

According to the U.S. Census Bureau, “Austin outpaced every other metro area in the nation from 2010 through 2019, and in 2020 (the latest figures), was the fastest-growing metropolitan area.” On average, the city gains 168 new residents daily, largely due to relocations. That trend shows no signs of slowing down.

❓ What are Taxes Like?

Even though you won’t pay personal state income tax (a huge bonus for people moving from states with high tax rates such as California and New York). The current total sales tax in Austin is 8.25 percent. While the county doesn’t currently impose a sales tax, the state charges a state sales tax of 6.25 percent. Austin adds to that a city sales tax of 2 percent. One percent of the city’s sales tax goes towards the improvement of its public transportation system.

While Texas doesn’t have a state income tax, it makes up for it in property taxes. According to Tax-Rates.org, the median property tax in Austin is \$1,903 per year for a home that is worth approximately \$150,000. Currently, the average median listing home price in the city is $579,000. Based on those figures, if you move to Austin, expect to pay at least \$6,000 annually in property taxes for a home slightly below the median home price.

For people moving from historically expensive cities such as Los Angeles, San Francisco, or New York (where many of Austin’s recent transplants have come from), it still works out to a lower cost of living. But for folks moving from smaller Texas towns or mid-sized cities, it’ll feel like more of a squeeze.

❓ Why Are Businesses Moving to Austin?

Austin-based economist Jon Hockenyos told national attendees of a 2021 forecasting event that Austin will be “one of the great global cities of the 21st century.”

It’s worth noting that along with a lower comparable cost of living, businesses that move or expand to Austin will also get exceptional business incentives and be privy to some of the lowest tax rates in the country.

The state of Texas has neither corporate or personal income tax — a boon for businesses and their employees. Business incentives range from sales tax and franchise tax exemptions for qualified businesses. Additionally, the state offers waived permit fees, property tax abatements, grants, and local funding for relocating or expanding businesses.

Additionally, the city of Austin has a Business Expansion Incentive Program that rewards qualifying businesses that perform in certain target areas with tax reimbursements and wage reimbursements.

Real estate opportunities are still readily available, especially for expanding businesses or manufacturing companies that require larger warehouse spaces. With a median salary of $93,000, the economy is strong, and businesses will have access to a talent pool full of smart professionals.

💡Additional Business Relocation Costs to Consider

Before you pack up, make sure you’ve accounted for all the potential costs:

✅ Deposits and/or lease fees for new office space
✅ Business registration fees or any fees tied to dissolving, reforming, merging, relocating, or converting your business
✅ Potential loss of productivity and revenue during the move
Employee relocation costs
✅ Marketing costs to inform clients about your new location
✅ Insurance costs for the move and for relocating employees
✅ One-time setup costs for the new office and employees: utilities, IT, furniture, cleaning, etc.

For a full list of Austin’s economic incentives, visit the Austin Chamber of Commerce website.

❓What is Austin’s Cost of Living?

Austin’s cost of living is higher than the national average, with a living index of 109—9 percent above the norm. Housing is a significant factor, but you’ll also pay more for healthcare, goods, and services in Austin.

❓What is Austin’s Real Estate Market Like?

The median listing home price in Austin is $579,000, with an average of $320 per square foot—much higher than the national median of $374,900. Depending on the neighborhood, you might pay even more. Areas like Circle C, Bee Cave, Westlake, and East Austin are known for their steep prices.

Homeownership is at 44 percent in Austin, meaning more than half of the city’s residents rent. A significant portion of renters (35 percent) pay between $1,501 and $2,000 monthly, while 20 percent pay more than $2,000.

❓Does Austin, Texas, Pay You to Move There?

While you won’t get paid to move to Austin, the city is part of a guaranteed income program that redistributes local taxes to lower-income families.

Ready to Move? We’ve Got Your Back.

We help business owners navigate the complex world of taxes, ensuring you stay compliant while minimizing your tax liabilities. Planning a move to Austin? Let us help you calculate your tax bite and make sure you’re maximizing your deductions when tax season rolls around. Reach out today, and let’s turn your big move into a smart move.

2024 Travel Nurse Tax Tips

Hey there, fellow Travel RN!

Taxes—no one loves ’em, but everyone has to deal with ’em. But don’t worry, we’re here to guide you through the maze of tax deductions and savings your tax accountant should be working on for you.

At Insogna CPA, we get the unique challenges travel nurses like you face. You’re not just a nurse; you’re running a business as a 1099 contractor, and that requires more than just number crunching. Our Austin, TX-based tax preparation team is here to help you maximize your tax savings while keeping things straightforward.

💡 Tax Prep

Let’s dive into the world of tax preparation specifically tailored for travel nurses. Picture this: you’re hopping from one assignment to another, providing top-notch care to patients. Along the way, you’re racking up expenses like lodging, meals, and transportation. The good news? Many of these expenses can be deducted from your taxes, meaning more money back in your pocket.

But there’s more! As a travel nurse, you’re constantly investing in your professional development. Whether it’s renewing licenses, attending conferences, or taking courses to boost your skills, these costs can also be deducted. That’s right—your commitment to lifelong learning not only benefits your career but your wallet, too.

And let’s not forget those snazzy uniforms—scrubs, lab coats, and any specialized attire required for your assignments. The costs to keep up your professional appearance? Yep, they can be claimed as deductions.

❓Business Tax?

Now, I know what you’re thinking—business taxes can be overwhelming. But don’t stress! That’s where our tax accountant team comes in. We specialize in tax services for travel nurses, helping you navigate the complex tax laws and ensuring you’re taking advantage of every deduction available. We handle the paperwork so you can focus on what you do best—providing exceptional care.

Choosing Insogna CPA means choosing peace of mind. We’re not just your tax accountant; we’re your financial success partners. With our tax preparation expertise, you can rest easy knowing your business taxes are in good hands.

Now that you’re a successful travel nurse making bank as a 1099 contractor, let’s make tax preparation rewarding by keeping more of your hard-earned money where it belongs—in your pocket.

Ready to keep more of your hard-earned cash?

Let’s chat about how our tax preparation services can make 2024 and 2025 your most financially rewarding year yet. Reach out to us today!

5 Common Mistakes Your Bookkeeper Can Make (and How to Fix Them)

As your small business probably knows, anyone can perform basic bookkeeping tasks. Categorizing synced transactions from the bank isn’t rocket science. But it’s not just about finding someone who can handle these responsibilities—it’s about finding an experienced bookkeeper who gets it right, on time, and works cohesively with your CPA. If your bookkeeper made these accounting mistakes last year, it might be time to rethink your business’s accounting strategy.

🚩 Didn’t Collaborate with Your CPA

Having a bookkeeper and a separate tax person can prove to be an issue, as they are not incentivized to communicate with one another. Consider hiring a licensed Certified Public Accounting Firm that specializes in helping small businesses bridge the gap between transactional work and providing ongoing tax strategy planning.

You will miss opportunities to legally save money on your taxes if your financial efforts are not ongoing and cohesive. If your bookkeeper doesn’t do their job correctly on a daily basis, your CPA will have to clean up messes later on in order to correctly prepare your business’s taxes. Bringing in an integrated CPA team will ensure a seamless financial experience throughout the year as the same group of licensed CPAs sees your business through from the beginning of the fiscal year through to the end.

🚩 Missed Opportunities to Legally Save on Taxes

Your business could take a significant hit thanks to a financial disconnect between your CPA and bookkeeper. Is your bookkeeper only equipped to take care of your straightforward and transactional daily financial tasks? Don’t skimp in this area; what you might save by hiring an inexperienced bookkeeper that makes accounting mistakes you will likely spend when paying taxes and then some.

Enlisting the expertise of an integrated CPA team guarantees that you are getting high-quality service from a group of CPAs that work together to benefit your organization.

🚩 Didn’t Provide Year-Round Advisory and Planning

To truly thrive, your company needs year-round, customized financial expertise from an industry professional that has been trained to help business owners like you. Trusting an unqualified bookkeeper that works in total separation from your CPA will not do the trick.

A strategy that was established at the beginning of the year might need to be altered if your bookkeeper reports that day-to-day conditions have changed since the strategy was put into place. A communicative, collaborative relationship between these two is crucial for your organization’s success.

🚩 Risked an Audit with Mis-Reporting

You will be a likely auditing target if your bookkeeper continually makes mistakes—even small ones. Rounding to the nearest whole number, simple math errors, incorrectly categorizing expenses, neglecting to track reimbursable expenses, and more can catch the attention of the IRS and put your business in a vulnerable position.

If errors of this nature don’t trigger an audit for your company, your CPA will either have to allocate extra time and effort to rectify these mistakes later on or your business will simply miss out on opportunities to save money.

🚩 Didn’t Get to Know Your Business

Your bookkeeper should have an in-depth familiarity with your business, its problem areas, its long-term goals, etc. in order to help you save money. Ask yourself the following questions:

❓ Can my bookkeeper help identify problem areas?
❓ Opportunities to increase profits?
❓ Do they understand my goals to grow my business?
❓ Do they help me figure out ways to cut costs?

If the answer is no, and your bookkeeper makes accounting mistakes, consider how upgrading to an integrated CPA team might improve the financial aspects of your business.

💡 What Can Be Done?

As mentioned earlier, there are straightforward solutions to these costly mistakes. At Insogna CPA, we specialize in bridging the gap between transactional bookkeeping and ongoing tax strategy planning, so your business doesn’t suffer from poor financial management:

✅ Small business bookkeeping that helps your company save as much as legally possible on taxes.
✅ Identifying problem areas, maximizing profits, and advising on how to cut costs—looking beyond just the numbers to see the full picture.
✅ Preventing unnecessary audits by maintaining accurate records and avoiding common reporting mistakes.

Is your small business’s bookkeeping more of a headache than a help?

Let’s chat about how we can help you take control of your financial future. Reach out today—we’re here to make sure your books aren’t just balanced, but that your business is too.

Can You Pay Taxes with a Credit Card?

With tax season behind us, the next big worry is paying off those remaining tax bills. If you’re considering your options, paying your taxes with a credit card might have crossed your mind. It’s an alternative to IRS payment plans and could even offer some tempting rewards if your card has the right perks.

But before you swipe, it’s important to weigh the pros and cons. Depending on your tax bill and your credit card’s terms, this decision could either save you some stress or cost you more in the long run.

💵 Processing Fees

Since the IRS can’t accept credit card payments directly, they work with three approved payment processors. Currently, the processor with the lowest fee is pay1040.com, charging 1.87% of your balance, with a minimum fee of $2.59. So, if you owe $2,000 in taxes, you’ll be charged a total of $2,037.40.

Remember, these fees get steeper the larger your outstanding balance, and you’ll need to pay them on top of any interest. If you go with an IRS payment plan and pay by direct debit or check, you’ll only owe the IRS interest rate and any applicable penalties, with no processing fees.

📌 Interest Rates and Balance Transfers

Interest rates vary by credit card, but the average is about 15.07%. According to the IRS, the rate for overpayments and underpayments is currently 6% per year, compounded daily.

If you plan to pay your balance off over time, you’ll likely pay more interest with a credit card, even if it’s simpler to calculate than the IRS interest rates, which change frequently. However, if you open a new credit card with a balance transfer offer and have good credit, you could get several months to a year to pay off your balance at a 0% interest rate, which can save you money and buy you some time. But if you miss payments or your credit isn’t great, this might not be an option for you.

💡 Credit Card Rewards

Credit card rewards, like cash rebates and frequent flyer miles, often make the extra fees and interest tempting when paying your taxes by credit card. Why not earn a free vacation while paying your taxes?

However, financial experts estimate that most credit card rewards only net you about 1% back on what you purchase. It’s worth sitting down and doing the math on how much you could save by sticking with the IRS interest rates and avoiding processing fees—you might be able to fund that vacation out of pocket instead. Unless you plan to pay off your entire balance immediately and the rewards are worth the fees, using a credit card for your taxes might not be the best financial move.

📃Tax Bills and Your Credit Report

If you need extra time to pay your taxes, an IRS installment or short-term payment agreement is usually a better option, as these don’t appear on your credit report. However, carrying a balance will appear once you shift the responsibility from the IRS to your credit card company.

In addition to affecting your available credit, it also impacts your credit utilization score based on how much of your available credit is being used.

If you’re looking for housing, more credit, or other situations that involve a credit check, you’ll want to avoid paying your taxes with a credit card.

✅ Weigh the Risks and Benefits of Paying Your Taxes by Credit Card

Ultimately, the decision to use a credit card to pay your taxes is a personal one. If you’re planning to take a longer-term approach, an IRS installment agreement is likely to cost you less both upfront and in the long run.

Need Help?

Not sure which payment option suits your situation best? Let’s connect and figure out the smartest way to handle your tax bill—without sacrificing your financial goals.

What Is The Penalty For Not Filing Taxes? Penalties and More in 2024

We’ve all heard the saying about death and taxes, but it’s surprising how many people still skip filing their tax returns. If you’re one of them, thinking you can fly under the radar, it’s time to rethink that strategy. Even if you can’t pay your taxes right now, filing a return is non-negotiable. Skipping this step can set off a chain reaction of unpleasant consequences that you definitely want to avoid.

Despite what you may have heard about the IRS being too busy to notice, the reality is quite different. The IRS has a job to do, and not filing your tax return could come back to haunt you in more ways than one. Let’s break down the key tax filing rules and what happens if you ignore them.

💡 Most People Are Required to File Tax Returns

If your income is less than the standard deduction and you don’t owe self-employment taxes, ACA penalties, or qualify for certain credits, you might think you don’t have to file a tax return. But with health and family assistance tied to tax returns, the number of people not required to file is shrinking. So, nearly all individuals, estates, and trusts need to file a return, and they may have to pay taxes. These are two different things, and there are penalties involved with ignoring either one. Even if you don’t have the money to pay the tax you owe, you’re better off filing a return rather than skipping the process. Here’s why:

The IRS imposes a fee for not paying your taxes and a separate fee for not filing. The larger penalty is for not filing—it’s 4.5% per month, compared to just 0.5% for not paying, and that fee gets charged every single month. You could end up paying up to 22.5% for failing to file and 25% for not paying (plus interest on unpaid taxes, which accrues from the return’s due date until you pay). The bottom line is that whether you can pay or not, you’ll save yourself big fees by submitting the required paperwork.

In addition to incurring fees, consider the actions the IRS takes when they don’t receive a tax return from you. The process involves preparing a substitute return, which will be completed without consideration of tax advantages, deductions, or write-offs. This leads to a higher amount owed than if you had prepared and filed your return yourself.

The IRS is limited by a rule known as the “statute of limitations,” which gives them just three years from the date you file to perform an audit. The three-year clock starts when you file a return, so the sooner you get the paperwork in, the sooner your risk of being audited expires. That statute also applies to any refund you might have coming—after three years from the date of filing, you forfeit any refund. Beyond the audit, if the IRS lets ten years from your filing date go by without pursuing the taxes you owe, they lose their ability to collect those taxes, penalties, or interest. The same is true for your ability to include your tax debt, interest, or penalty debt in a Chapter 7 Bankruptcy discharge, which is based on the date of your tax filing (generally two to four years after you file your tax return).

❓ What If You Can’t Pay Your Taxes?

What happens if you file your return without submitting the money you owe?

Once the IRS processes a return that isn’t accompanied by payment, or discovers a taxpayer’s failure to file and pay taxes, they issue a Notice of Tax Due and Demand for Payment detailing how much you owe in taxes, interest, and penalties. You can submit payment via cash, money order, credit card, check, or electronic funds transfer, and the sooner you pay, the better, as penalties and interest will continue to accumulate. If you don’t have the funds available, it’s better to contact the IRS and discuss your problem with them than to ignore the notification. Options for resolving your payment issue include:

✅ Allowing a temporary delay: This is generally offered after a review of your situation, during which time the agency may file a Notice of Federal Tax Lien. This document allows the government to place a claim on what you owe until you can pay.
✅ Setting up an installment agreement: This allows you to make smaller monthly payments based on what you can afford.
✅ Settling through an Offer in Compromise: This is an agreement that’s possible only after all other options have been exhausted, allowing you to pay a lower amount than what’s owed. It’s issued after a complete review of your financial situation and addresses penalties and interest along with the original tax amount. Reaching an Offer in Compromise requires filing an application that costs $150.

It’s important to remember that if you receive a tax bill you think is incorrect, ignoring it is just as big a mistake as not filing a return. Instead, take positive action by contacting your local IRS office and bringing all pertinent documentation to prove your case.

Need Help?

Beyond the financial penalties, failing to file a tax return when you owe money can lead to more severe consequences, including potential criminal charges and a whole lot of stress. Stay on top of the tax filing rules, communicate with the IRS, and save yourself a world of trouble—and money.

Don’t let tax deadlines and penalties get the best of you. Reach out to our team today to help you file back taxes and stay up to date with current tax filing rules and deadlines in 2024. Let’s tackle this together and keep you in the IRS’s good graces!