Discussion:Alimony or not?
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Discussion Forum Index --> Tax Questions --> Alimony or not?
| 11 April 2008 | |
| Do payments from an exhusband count as alimony if there is not a written order, decree, agreement, etc.? From the research I've done it looks like there has to be a 'divorce or separate maintenance decree or a written instrument to that decree'. If it was just a verbal statement does that count? | |
| 11 April 2008 | |
| Has to be written order and you can only deduct payments after the written order. I had a case of a couple who was separated in March and alimony payments began then. However, divorce was not final until June and even though the decree stated all payments going back to March were alimony, Mar-Jun was not deductible. | |
| 11 April 2008 | |
| Great, that's what I thought. Thanks for your fast response. | |
| 11 April 2008 | |
| What about the other side? New client, just divorced in 2007, ex 'verbally' agreed to pay her $XX per month and did. She thinks he may be taking this as a deduction on his business return (not our problem), but insists to her that it is not taxable to her. I've not run into this before and, although it wouldn't matter to her, me knowing this and wondering if he's actually taking a deduction (no 1099 issued, no provision in divorce decree for alimony or child support even though she has custody of their disabled daughter) concerns me. Don't really know what my responsibility for reporting this would be. Sometimes, if they'd only keep it to themselves...ignorance can be bliss. Still, I don't like not knowing what I should know. Thank you. | |
Death&Taxes (talk|edits) said: | 11 April 2008 |
| Captcook's example could be different if the payments were court ordered and then incorporated into the divorce: in Pennsylvania this is known as alimony pendente lite which I have had accepted on audit, and which prominent divorce lawyers assure me is deductible. | |
| 12 April 2008 | |
| Wow, this year I have so many people getting divorced and married.
Anyway, I have a new situation with alimony. There is something in writing this time (written by attorney) but nothing was agreed to or signed as of yet. I've researched and found on www.ftb.ca.gov/law/summaries/Alimony.pdf that "payments must be made pursuant to an enforcable legal obligation to be deductible as alimony."(California law is the same as Federal law according to the website). What I can't figure out is if my client needs to claim the alimony because I am not sure that this is an "enforcable legal obligation". Any help is appreciated.(The other spouse is not cooperating by providing details of his tax return already filed.) | |
| 13 April 2008 | |
| There must be a written separation agreement for the payment to qualify as alimony. Don't believe that the separation agreement needs to be signed. See Ralph F. Osterbauer, TC Memo 1982-266. | |
| 29 April 2008 | |
| Sorry to bring this back up, but I just can't seem to resolve this in my mind. If the ex is not required to pay child support or alimony but gives his ex-wife a set amount each month (out of the goodness of his heart - I'm sure) and total for the year is over $40,000, what's reportable? I have been assured that he is not deducting as alimony (and does not have a written agreement to do so), though he may be doing something with it, but what is it to ex-wife (my client)? Too much for gifts - what in the world do I do with this? Thank you. | |
Death&Taxes (talk|edits) said: | 29 April 2008 |
| Gifts can be any amount; the ex would have to be filing gift tax returns assuming there are not enough people to cover at 12K a year. I had a client once who continued to pay alimony out of 'goodness to heart' after the term expired. Naturally ex did not pay tax on it, and when IRS picked it up, he lost....nothing in writing.
In your case, nothing is reportable by the wife. | |
| 30 April 2008 | |
| As long as the children are under the age of majority, I would argue that the payments to the ex-wife are part of a parental support obligation, and no gift tax should be payable. | |
