info12
recently joined
Reged: 12/28/06
Posts: 1
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I would like to know if these are considered an asset or not. I recently received a decision....one of the issues being heard on a motion to reconsider is whether the estimated tax payments that we made for this year are to be split or not. I am the wife, who has been awarded alimony.....the husband is the high income earner....I cannot find research to indicate if this is an asset or not...
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Gecko
Carpal \'Tunnel
Reged: 06/01/04
Posts: 19803
Loc: Third rock from the sun
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Estimated Tax Payments are a libility, NOT an asset. This is money that you OWE to the federal government.
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If you air your dirty linen in public, expect people to comment on the skid marks!
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Miranda
Carpal \'Tunnel
Reged: 06/02/05
Posts: 20822
Loc: North of Mexico
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Quote:
Estimated Tax Payments are a libility, NOT an asset. This is money that you OWE to the federal government.
Yeah ummm that is what I was thinking. How can that be an asset unless it is some kind of a revenue?
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13.1...because I am only half crazy!
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Avaya
Carpal \'Tunnel
Reged: 02/09/06
Posts: 9816
Loc: Arkansas
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Estimated tax payments are an ASSET (prepaid taxes!!!)listed on the balance sheet. They are PROBABLY going to be due to the government, that is why tey were calculated to begin with, but are not considered an expense UNTIL the tax return is filed and the money is considered due. There is no income tax liability until the end of the year when the tax return is prepared.
The payments do need to be split IF paid from joint income (to be fair). If not split, what will happen is that you will file your tax return and show NO payments made, possibly resulting in taxes due and penalties for underpayment. He will show the whole amount of payments and possibly get a refund for overpaying if the estimates were made based on your income too.
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Eternity is too long to be wrong.
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Miranda
Carpal \'Tunnel
Reged: 06/02/05
Posts: 20822
Loc: North of Mexico
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They are an asset on the balance sheet (for accounting purposes) as all pre paid expenses are like rent, utilities, etc. but is it really an asset in a divorce case? You owe the money to the IRS you have to pay it, so why would that be divisible in a divorce case?
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13.1...because I am only half crazy!
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Miranda
Carpal \'Tunnel
Reged: 06/02/05
Posts: 20822
Loc: North of Mexico
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Also can't you pay income tax quarterly? So the pre paid taxes could be expensed quarterly.
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13.1...because I am only half crazy!
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Gecko
Carpal \'Tunnel
Reged: 06/01/04
Posts: 19803
Loc: Third rock from the sun
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There is no income tax liability until the end of the year when the tax return is prepared.
---> That is not correct, otherwise, why do we HAVE TO have taxes taken out of our paychecks? That's because the tax is [supposed to be] due and payable at the time the income is earned.
---> Also, it's only "prepaid" if you're running an accrued accounting system, otherwise it's just expensed and frankly, I don't know anyone who would look at "prepaid taxes" and say "Wow...look at all this money you have available to spend".
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If you air your dirty linen in public, expect people to comment on the skid marks!
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Avaya
Carpal \'Tunnel
Reged: 02/09/06
Posts: 9816
Loc: Arkansas
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No, it's not considered money to spend. If the estimates were prepared based on BOTH incomes, and HE gets to keep all of the estimates, then SHE will owe money that has already been paid on her behalf. Considering the REASON for the question, I would consider the prepayments an ASSET to be divided based on the income that was used to calculate the estimates. Anything else would be irresponsible and BAD advice. Asset does NOT equal 'cash to spend' DUH.
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Eternity is too long to be wrong.
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Gecko
Carpal \'Tunnel
Reged: 06/01/04
Posts: 19803
Loc: Third rock from the sun
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No, it's not considered money to spend.
---> That's why I said it wasn't an "asset". Estimate Tax Payments are amounts estimated to be due and payble to the IRS.
If the estimates were prepared based on BOTH incomes, and HE gets to keep all of the estimates, then SHE will owe money that has already been paid on her behalf.
---> Huh?
Considering the REASON for the question, I would consider the prepayments an ASSET to be divided based on the income that was used to calculate the estimates.
---> But there is nothing TO "divide"...the money has already been paid. There MIGHT be a refund...IF the January 15th payment is made OR they MIGHT still owe money come April 15th.
Anything else would be irresponsible and BAD advice. Asset does NOT equal 'cash to spend' DUH.
---> DUH yourself. Unlike you, I don't want this lady thinking that this is money in her pocket...money she is going to receive by calling it an "asset".
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If you air your dirty linen in public, expect people to comment on the skid marks!
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Avaya
Carpal \'Tunnel
Reged: 02/09/06
Posts: 9816
Loc: Arkansas
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Quote:
No, it's not considered money to spend.
---> That's why I said it wasn't an "asset". Estimate Tax Payments are amounts estimated to be due and payble to the IRS.
Assets are NOT just cash. You should know that.
Quote:
If the estimates were prepared based on BOTH incomes, and HE gets to keep all of the estimates, then SHE will owe money that has already been paid on her behalf.
---> Huh?
Are you kidding me? Aren't you an accountant? Estimates are prepared by the accountant and provided to the taxpayer - telling them how much to pay each quarter. They are calculated based on the prior year's income, plus any adjustments known for the following year. The estimates have been paid. If they make equal money but he gets credit for the estimates paid, then he is likely to be overpaid and she WILL be underpaid. That is why the estimates paid should be split based on the income used to 'estimate' them.
Quote:
---> But there is nothing TO "divide"...the money has already been paid. There MIGHT be a refund...IF the January 15th payment is made OR they MIGHT still owe money come April 15th.
You can't be serious. There IS something to divide - ownership of the tax payments! Yes, the payments have been made and applied to their JOINT liability. If he gets to keep the payments on just his liability, then SHE could end up owing taxes that she already paid when the estimates were made. And he could be refunded money that was initially paid to cover HER taxes.
Example:
His AGI $100,000
Her AGI $50,000
Estimates are calculated be $2000 per quarter (hypothetically) and three of them are made. His income is 75% of the total so he should get credit for 75% of the estimates made. Her income is 25% of the total so she should get credit for 25% of the estimates made. If you don't consider it an asset and you don't split it and give it all to him, then she is underpaid even though she did make the estimates from joint funds during the marriage. If you give it all to her, he is even more underpaid even though he made the estimates from joint funds during the marriage and she will get a refund of money that was paid to cover his taxes.
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Eternity is too long to be wrong.
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