I got divorced in San Diego, Ca 9/27/79. My wife was awarded 25% of my retirement pay even
though I would not be eligible to retire until 1/23/85. If I had not retired, I would owe her zero.
I continued to serve while raising our two children as a single parent and retired 9/01/85. She
remarried and divorced twice and is about to remarry a third time. Is there a reduction mandated
for each time she remarried? I have not been allowed by my tax accountant to deduct the 25%
or the income tax that I pay on the 25%. Shouldn't I be able to treat the payments like alimony?
Are there any appeals available to me? As for as I know, military retirement is the only retirement
treated as community property. Thank you very much for your help. Sincerely, Larry
Thanks for the chance to assist.
And you hit the nail on the head...military retirement can be treated as retirement pay. Congress said this when they passed the former spouse protection action
More info here
Since its treated as community property, it is not considered alimony and you do not get a tax break on it. And appeals are difficult...the division of your pension was done by the divorce court...so you would need to apply to that court to re-open the proceedings. However, it is very difficult to change a property settlement from divorce court...basically the only way to change is if you can prove fraud on the other party.
And because this was treated as property, her re-marriage will not affect her entitlement.
Sorry to bear bad news, but there is not much you can do to change this
Please let me know if you have further questions; if so I will do my best to answer them. If not please hit the accept button, its the only way I get credit for my work.
Retired Marine Corps Lawyer, Veterans Services Officer (VSO)
A retired serviceman's payments to his former wife of her share of his military retirement pay were deductible as alimony, the U.S. Tax Court has ruled.
The husband was in the U.S. Navy. The couple's divorce decree required him to pay 25 percent of his disposable retirement pay pursuant to the Uniformed Services Former Spouses' Protection Act. When he retired, he made several lump-sum payments over the next two years to make up for past deficiencies in alimony and child support obligations. He deducted a portion of the payments as alimony. The IRS argued that payments related to the division of his retirement pay were marital property rather than alimony, and therefore not deductible.
But the court disagreed.
The wife "received the retirement payments pursuant to a divorce decree. [The couple] resided in separate households at the time the payments were made. [T]he retirement payments will terminate, by operation of law, on the date that either [party] dies, whichever occurs first. [Therefore,] the retirement payments meet the requirements of Sect. 71(b)(1) [of the Internal Revenue Code], and pursuant to Sect. 215, [the husband] is entitled to a deduction for alimony payments."
Proctor v. Commissioner (Lawyers USA No.(NNN) NNN-NNNN U.S. Tax Court No. 2813-06. Oct. 10, 2007.
I had not seen this and want to review it. I'm by no means an expert in Tax law...but on the surface this is incredible news.
I did a quick read of the opinion, and it hinges on characterization of the payments made from a divorce decree. It does NOT mention community property aspect, which is what the FSPA focused on (state court ability to divide pensions as property)...so there is a disconnect.
BUT IT IS AN OPINION OF THE TAX COURT. I would pass this on to your accountant. IF your audited, you have this opinion to rely on to avoid a fine.
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