Why are state taxes different for itemized deductions than for “actual” state taxes?
This is due to the software’s resolving of a bit of circular logic. Federal taxable income depends on the state tax, because state tax is an itemized deduction. But in some states, state tax depends on federal taxable income. So the computation is circular. Here’s how the software resolves this: For the calculation of the […]
Why is the child support income higher than the amount I entered?
Question: Why is the child support income higher than the amount I entered? Answer: This can happen if there is an additon to income from federal subsidies that are administered through the tax system. These subsidies include the Earned Income Credit and the Child Tax Credit. To see if this is the case, see if […]
Why is the software’s tax calculation different from what I see on the pay stub?
The software calculates federal income tax, after accounting for all deductions and credits, using actual current numbers. The pay stub can be very different for a number of reasons: 1. Withholding. Employees can control the withholding through their W-4 selections. They can specify fewer or more exemptions than are likely, thus decreasing or increasing their […]
Does the software flag alimony or spousal support that is “clearly associated with a contingency” — the so-called “contingency rule”?
In a word, no, the software does not flag the contingency rule. Some background: If alimony is clearly "associated with a contingency" in the life of a child, that alimony may be recharacterized as child support. The reason for this rule is to prevent people from deducting for tax purposes payments that effectively are child […]
Where in the software can I see the impact of the provisions of the 2017 tax act?
The sections below will discuss the various provisions of the 2017 tax act that are incorporated in Family Law Software. After the first two items, the items are listed in the sequence you will find them on the View/Edit Taxes screen (which is the same as the sequence you would find them going down the […]