Did Ex-spouse Claim Too Much Alimony?

[TAXNJ]

What alimony amount does ex-spouse claim for tax year?

SCENARIO:

Calendar year cash basis taxpayer (ex-spouse)

Divorce decree states spouse to pay ex-spouse $35,000 a year to be taken out of the spouse’s paycheck by the state who then electronic deposits to ex-spouse’s bank account.

However, in the last week of the year, the state takes out an additional $1,000 alimony meant for the following year , and electronic deposits to ex-spouse’s bank account by December 29.

What amount does the cash basis ex-spouse report as alimony received from spouse in this tax year scenario - $35,000 or $36,000?

[oceanlovin'ea]

If it was deposited in her bank account before the end of the year, then I would think she would have to report $36,000.00. That is what she got.

Linda, EA

[Gary2]

My first reaction was to include the extra $1000, but then I thought about it some more.

If the spouse were writing out checks by hand, say $1000/month on the 15th of each month as specified in the divorce decree, but chose for the month of December to make the check $1500, with a note saying "Happy Holidays", it wouldn't be alimony - voluntary payments are gifts, not alimony. On the other hand, if it included a note saying "Here's half of January's, a month early", then it would be - it seems unlikely the divorce decree would prohibit early payments like this.

In this case, I don't know. Possibly the divorce decree would clarify it, possibly the automatic payments were set up incorrectly. I think that getting the extra $1K credited to the next year's payment is a bigger headache than figuring out which year to claim it.

[taxea]

My first reaction was to include the extra $1000, but then I thought about it some more.

If the spouse were writing out checks by hand, say $1000/month on the 15th of each month as specified in the divorce decree, but chose for the month of December to make the check $1500, with a note saying "Happy Holidays", it wouldn't be alimony - voluntary payments are gifts, not alimony. On the other hand, if it included a note saying "Here's half of January's, a month early", then it would be - it seems unlikely the divorce decree would prohibit early payments like this.

In this case, I don't know. Possibly the divorce decree would clarify it, possibly the automatic payments were set up incorrectly. I think that getting the extra $1K credited to the next year's payment is a bigger headache than figuring out which year to claim it.

It seems unlikely to me that an EX spouse would gift that much for Xmas.
Without reading anything into the OP, such as a possible gift, that isn't mentioned then I would say the receiving spouse reports the amount on the 1099 or deposited into that spouse`s account and the paying spouse does likewise for the amount withdrawn for the year from acct.

[FEDUKE404]

Question

For the life of me, I cannot figure out why a single payment of $1000 "meant for the following year" was paid in the first place.

If the going annual rate is $35k, that would translate into approximately $2920/month or $675/week ---- neither of which makes sense for a $1000 payment.

Sounds as if there are some extra payments, and they may well include what is/is not true alimony.

But regardless of any "intent" - she received $36k in the period 01/01 through 12/31 and that is what I would report. Had a paper check been transferred, there might be some gray areas.

BTW: I have not seen that many clients with true alimony payments (paying or receiving) but even so I've not encountered a Form 1099 for such. Is that common now??

FE

[TAXNJ]

THANKS to all

Yes, in this scenario, it could have been the way the state programming works in taking out the alimony payments to be electronically deposited - bottom line, ex-spouse had "constructive receipt" of the payment for the following year before the following year and should include it as "alimony received" in the year received

[NSNM]

US Master tax Guide Paragraph 773

Quote from 2011 US Master tax Guide Paragraph 773

Year of taxability or deductibility.
Alimony payments are generally includible in income in the year received (Code Sec 71(a): Reg. 1.71-1) and are deductible in the year paid (Code Sec 215; Reg. 1.215-1) regardless of whether the taxpayer employs the cash or accrual method of accounting. A recapture rule prevents "front loading" of alimony payments. See Paragraph 774 for detailed discussion.

Obviously $36000.

[taxea]

For the life of me, I cannot figure out why a single payment of $1000 "meant for the following year" was paid in the first place.

If the going annual rate is $35k, that would translate into approximately $2920/month or $675/week ---- neither of which makes sense for a $1000 payment.

Sounds as if there are some extra payments, and they may well include what is/is not true alimony.

But regardless of any "intent" - she received $36k in the period 01/01 through 12/31 and that is what I would report. Had a paper check been transferred, there might be some gray areas.

BTW: I have not seen that many clients with true alimony payments (paying or receiving) but even so I've not encountered a Form 1099 for such. Is that common now??

FE

Seems to me that if the funds are issued through some agency and not directly paid by the ex then a 1099 should have been issued.

[Gary2]

Seems to me that if the funds are issued through some agency and not directly paid by the ex then a 1099 should have been issued.

I know of no reporting requirements for alimony, nor any form designated for that purpose. It's one of the pains of dealing with divorced couples that divorce attorneys often don't take into account.

[kpangelinan]

I concur with most on here....$36,000 and I've never heard of any reporting requirements either.

[Jesse]

BTW: I have not seen that many clients with true alimony payments (paying or receiving) but even so I've not encountered a Form 1099 for such. Is that common now??

FE

I know of no reporting requirements for alimony, nor any form designated for that purpose. It's one of the pains of dealing with divorced couples that divorce attorneys often don't take into account.

I am also curious as to when a 1099 would ever be required for alimony paid/received, because at $600 or more this would affect many, many taxpayers.

[FEDUKE404]

About that WHAT 1099?...

I know it's a stretch, but how about this:

Most folks who pay alimony have a vested (i.e. financial) interest to put that amount on their personal income tax return.

Those who do so are also asked to provide the Social Security number of the recipient.

I doubt if that dollar amount/SSN goes totally unnoticed by the IRS.....

A similar scenario might apply to all of that "information" a parent has to enter on Form 2441 for claiming their little darling's day care expenses.

But then again, common sense generally has little to do with tax matters.

At least I do feel a bit better now about never having seen any Form 1099 that deals with alimony payments.

BTW: Getting back to the original post here - I wonder if perhaps the required amount was $36k/year ($3k/month) and the final payment was just some year-end financial housekeeping to be in line with compliance??

FE