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DanielleCPA, Certified Public Accountant (CPA)
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As a result of a divorce (11/10) I was awarded 50% of my exhusbands

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As a result of a divorce (11/10) I was awarded 50% of my exhusband's SERRP which was payable on 6/30/11. Since it is not gooverned by a QDRO (non-qualified plan) my ex was paid the entire amount and taxes were taken out. I am to receive 1/2 of the net amount. How will I report this income and if I have to report the gross amount how do I get credit for the FICA etc. that I have paid.

Thank you, Mary
Submitted: 3 years ago.
Category: Finance
Expert:  DanielleCPA replied 3 years ago.

DMC :

Hi and welcome to Just Answer! I'm happy to help answer your Finance questions. Feel free to interject at any time if you need clarification.

The gross amount of the distributions from your husband's SERP (also known as 457(f) plan would be reported on your husband's W-2. Taxes would be taken out accordingly and also reported on his W-2. The entire gross amount would be reportable by him on his 1040.

The taxability of the distribution to you depends on how it is being structured under your divorce agreement. If the distribution you receive is treated as alimony, then the net amount you receive will be taxable income to you and deductible to your husband. If the distribution is treated as part of the settlement of marital assets, than it would not be taxable to you. I think it is probably part of the settlement, but please consult with your attorney for how it is being handled.

Customer:

It is part of the settlement agreement. I guess my larger question is how will I be sure that my ex didn't have too much tax taken out to boost a larger return. and what would prevent him as listing it as alimony?

DMC :

If you know the gross amount of the distribution, you should be able to reasonably estimate how much tax should have been taken out -- 1.45% for Medicare taxes, 6.2% for Social Security taxes, and whatever income tax rate he will be at.

DMC :

Technically, there is nothing preventing him from listing it as alimony. In the event he did so though, it would generate a notice from the IRS for you, as you must report your ex-spouses SSN on your return when alimony is paid. The IRS does this so it can match up the deduction with the income. However, if the divorce agreement does not list it as alimony, then the law would be on your side, since he would not have been entitled to the deduction per the divorce decree. You would need to provide the divorce decree to the IRS as proof if this were the case.

DanielleCPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 727
Experience: CPA experienced in tax and financial planning
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