Alimony Help

[BOB W]

Here is an interesting divorce agreement. My question is- what is her alimony reportable and what is her deduction for interest and taxes? Additional fact, the marital residence is jointly owned by both ex and spouse.

“The plaintiff shall directly pay the mortgage and real estate tax expenses on the marital residence, currently $2,487 per month, and the sum of $1,360 per month on the first Monday of each month {as and for the Mother’s maintenance.} If the Plaintiff is late on two consecutive payments within a twelve month period Plaintiff will remit payment directly to the defendant and defendant will pay the mortgage and real estate taxes. Upon the sale of the marital premises, plaintiff obligation to pay maintenance shall be reduced to the sum of $2,000 per month, which amount shall not be taxable the defendant nor deductible to the plaintiff. “

[Bird Legs]

Alimony

See The TAX Book top of page 12-12 under alimony. "Payments to Third Parties"
under a divorce or separation instrument can qualify as alimony (medical expenses,
rent, taxes,tuition, etc.) Payments are treated as received by the spouse and then
paid to the third party. The recipient spouse is taxed on the alimony and can claim
deductions for items paid with the alimony if other requirements for specific deductions
are met.
* Home occupied by spouse. If under the terms of a divorce or separation instrument one spouse occupies a home that belongs to the other, payments for mortgage, real estate taxe, insurance and repairs are not alimony. Payments for utilities may be alimony.
Rent free use of property is not alimony.

* Home owned as joint tenants. Half the mortgage is alimony. Property tax and home insurance payments are not alimony.

Payments made at the written request of the spouse receiving alimony qualify as alimony if paid in lieu of alimony that would be paid directly to the spouse. The written request
must state that both spouses intend the payments as alimony and payer must receive
the written request before filing.

[Armando Beaujolais]

Upon the sale of the marital premises, plaintiff obligation to pay maintenance shall be reduced to the sum of $2,000 per month, which amount shall not be taxable the defendant nor deductible to the plaintiff. “

This reminds me of the client I had who was divorcing his wife, not yet final. According the decree, she had full custody of the kids. The separate maintenance decree "awarded" Head of Household filing status to my client (who was the noncustodial parent). I explained that under tax law, there is no way on this green earth that he could qualify for Head of Household filing status if he had zero qualifying persons living in his house. "But it's right there in the court decree!" The only way he could file under tax law was as Married Filing Separately. Amazingly enough, after I'd given him some basic references, he looked at it himself, and he kept me as his tax preparer, even though going against the decree cost him big bucks.

I sure wish lawyers and judges would stop trying to rewrite the tax code. It's a classic example of enough knowledge to make somebody dangerous. It might be taxable and might not, depending on the tax code. A divorce decree declaring that income "shall not be taxable" is the epitome of clueless narcissism.

[BOB W]

Thanks .......

... I read all of that before I posted but was unable to find a definitive conclusion. Please re-read the agreement. The agreement seems to imply that the full mortgage payment is to be considered alimony. TTB says the all of it should not be alimony, but the way the agreement is written it seems to be inclusive.

Thanks

[BOB W]

According.......

..... to TTB the agreement is allowed to stipulate non taxable alimony.

[Bird Legs]

Bob, did you

look at Pub. 504? re. alimony? There may be something there.
Good Luck.
Also, try Googling. Type in Alimony Taxable or Nontaxable. Then go search.