“No, David, I need her social security number.
“I don’t have it. Just list it anyway.
“No can do. It doesn’t work that way.”
This is one of many conversations I have had with my clients who provide alimony to their spouses.
Because alimony is deductible to the payer- and taxable to the receiver. It’s why some divorcing folks negotiate deals to pay higher alimony, instead of child support. The only problem with that idea is that the ex-spouse can always go to Juvenile Court and get the child support raised (there are state formulae)- and then you are stuck paying some big payments.
And, then, last week, I received a notice from the IRS. They are on the warpath- because there are some pretty big discrepancies in reporting. It seems that there is a difference of $ 2.3 billion in alimony reported being paid and alimony reported being received for the 2010 tax return year. Actually, the specific values differed between the parties almost 1/2 the time (47%).
So, now the IRS is going to be checking each return for the social security number to whom the alimony is claimed to be paid and the alimony receiver. To be honest, I have no clue why the IRS waited so long. After all, they check the SSN for every interest payment to make sure we claim them. Why would they think that everyone would report their alimony as income?
(No, the IRS does not follow the dictum, “Trust, but Verify”; their mode is that we are all crooks. Unfortunately, they are closer to right than we all want to believe.)
Now, one of these issues are that ex-spouses don’t always agree on what is alimony and what is child support. But, to be honest, the decree of the court is the ruling authority- and what they say goes. But, now the IRS will use SSN tracking just like they do for children (and other) dependent exemptions, to
make sure that only one party claims the dependent.
Oh, and “maintenance” is just another word for alimony. So, sorry, Ms. J- you owe taxes on those funds, too.
…there are some slippery folk around Roy!
Caro Ness recently posted..A Clean Pair of Lungs
Yes, and we are stuck paying the difference, Caro!
Well here’s my gripe. Why can’t child support be deductible? After years of paying it to my ex’s ex while we were still married I always thought it unfair we couldn’t deduct it. Later when he and I divorced I gave him one of the kids as a deduction to try to be fair. Seems like it should be reportable income and deductible expense.
Carolina HeartStringshttps://www.adjuvancy.com/wordpress/index.php?social_controller=auth&social_action=authorize&key=facebook&post_id=16313 recently posted..SCALLOPS AND GRITS
While I don’t ever claim to speak for the IRS (or, G-d forbid, Congress), I think the thinking is that child support is supposed to be a support- not the full costs of raising a child. The person who gets to deduct the child gets an exemption, which is 3600 or so. That also doesn’t cover the cost of a child….So, neither is child support deductible or reportable.
Alimony was (note the verb tense) supposed to help the “other” spouse get on her (yes, her) feet, after divorce. It was in lieu of earnable income that she would not be able to obtain. It’s why alimony now has a finite lifetime, it’s why it ceases upon subsequent marriage, etc. It is deductible to the payer and reportable by the recipient.
is that a help, Alessa?
I’m shocked that the IRS didn’t require the SSN of the alimony receiver sooner. It seems that they never leave any stoned unturned!
Oh, they required it, Suerae. It’s just that they (at least to me, obviously) never checked for the corresponding entry on the ex-‘ tax return.
Divorce is never easy. On top of this, it looks like after a divorce the taxes become even more complicated to manage. It just never stops…
Muriel recently posted..My Escape From Casual Sexism
Oh, I am not so sure, Muriel. I just think too many people look for ways to keep what they think is theirs- without regard to what is required.