KANSAS CITY, Mo.--(BUSINESS WIRE)--Feb. 25, 2004--The show may have started as a salute to sex, high fashion and independence, but our fun-loving, sassy, 30-somethings' lives all took very grown-up directions as they sashayed down a Manhattan sidewalk for the final time last Sunday evening. And, while the women of "Sex and the City" leave us to ponder the romantic "what might have beens," there's one big question that has yet to be answered for these four women: "What kinds of tax implications do all their life changes bring about?"

In case you're wondering, H&R Block has some advice for all of the Carries, Samanthas, Mirandas and Charlottes in similar situations.

Charlotte:

Charlotte and her husband Harry are planning an international adoption and as a result will be eligible for a slew of tax breaks. If the adoption is finalized in 2004, Charlotte and Harry may have to wait until 2005 to get some of the tax breaks, but sooner or later, they'll be eligible to claim:

    --  An adoption expense credit of up to $10,390 (for 2004) in the
        year the adoption becomes final;

    --  A dependency exemption worth $3,100;

    --  A child tax credit worth up to $1,000 (if Harry's AGI is less
        than $110,000); and,

    --  A child and dependent care credit if Charlotte pays a nanny so
        she can go back to work at an art gallery.

    Miranda:

Miranda just bought a new house in Brooklyn, has a year-old son, got married to Steve, and will be looking after and supporting her mother-in-law, a recent stroke victim. Miranda and Steve can look forward to some nice tax breaks as well:

    --  A dependency exemption worth $3,100, and a child and dependent
        care credit for elder care for her mother-in-law;

    --  Assuming Miranda and Steve itemize, they can write off medical
        expenses (the kind insurance and Medicare don't cover) for her
        mother-in-law, as well as for herself, Steve and the baby.
        Remember, however, that only medical expenses that are more
        than 7.5 percent of all of their combined adjusted gross
        income can be written off;

    --  The medical expenses may include modifications to the house in
        Brooklyn, such as a wheel chair ramp and widened doorways. A
        word of advice: the write-offs are only for the change in
        value of the house, not the actual expense; and,

    --  The new home carries with it some great tax-savings benefits:
        mortgage interest and real estate taxes.

    Samantha:

Samantha is many things, including a breast cancer survivor. With her valiant fight against the disease, she has undoubtedly incurred medical expenses that will be tax deductible:

    --  By itemizing, Samantha can write off medical expenses not
        covered by her insurance or flexible medical spending account
        (the same 7.5 percent limitation applies as in the Miranda
        example above); and

    --  Now what about those wigs? As a public relations executive and
        business owner, persona is key to her success. The bad news,
        however, is that the wigs cannot be deducted as a business
        expense. She can, however, write the wigs off as a medical
        expense since her hair loss was a direct result of her cancer,
        as long as her doctor is willing to prescribe the wigs as part
        of her treatment to "avoid mental upset." But can Samantha
        write off more than one wig? Hmmm. Maybe. The IRS will surely
        raise an eyebrow or two and the short answer is that not all
        the wigs will likely be deductible.

    Carrie:

Carrie spent two weeks in Paris, found out her book was a hit in France, and is now back in Manhattan. Though she still has her condo (mortgage and all), she has no job and is now wondering what to do with all those designer shoes:

    --  If Carrie itemizes, she can claim a deduction if she gives the
        designer shoes and clothes to a qualified charity, but what
        value can she attribute to each Manolo Blahnick and Prada
        wearable? If she's willing to do her homework, she can visit
        several resale stores and come up with a fair market value for
        them, or she can take an easier route and check the "value" of
        her designer duds by using H&R Block's DeductionPro software;

    --  Carrie may be tempted to sell her designer shoes and clothes
        at the Columbus Avenue Flea Market in Manhattan; but no tax
        write-off there;

    --  According to the U.S. /France income tax treaty, Carrie's book
        royalties may be taxable in both countries. She may be able to
        take the foreign tax credit to eliminate the possible double
        taxation; and

    --  Sorry, Carrie - no foreign earned income exclusion for a
        two-week trip. You need at least 330 days abroad to qualify
        for this exclusion.

So, while the women made us laugh, cry and envy their wardrobes, they're teaching one final lesson to the masses who were addicted to the show: there's a real need for sound tax advice when you encounter significant lifestyle changes.

    Good luck, ladies...we wish you well.

    About H&R Block

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    CONTACT: H&R Block
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             dsposato@hrblock.com

    SOURCE: H&R Block