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So if I understand correctly, if I live in Germany (but am a U.S. citizen), I have to pay alimony tax in Germany only and not to the U.S. as well or instead of, correct? If I live in the U.S. I still have to pay alimony tax if my ex lives in Germany (and is only a German citizen and therefore does not need to file a U.S. return) to the U.S.? I am only asking because I thought the purpose of paying the tax in the U.S. was the payer could deduct it from their taxes and the recipient is then taxed on the alimony and so the government "breaks even." If my ex-husband does not receive a tax deduction in the U.S., then why do I have to be taxed on the alimony in which case the government would come out "ahead"? It might also be that he is not allowed to get a deduction even in Germany if I am living abroad as I read that somewhere. I read the following online which is why I am asking these questions:
The IRS can always surprise you. I live in Germany and pay alimony to a spouse in the US. My alimony is not deductible in Germany, because under German law it is deductible only to spouses who live in the European Union.But, here's the funny part. Under a tax treaty with Germany, if the alimony is not deductible in Germany, then it is not taxable in the US.http://www.irs.gov/pub/irs-trty/germany.pdf (Article 18, rule 4)
Sorry to verify, but just want to be 100% clear (you have done a good job of explaining).
If I, the recipient live in Germany, my ex can deduct his alimony payments in Germany and I then only owe taxes on my alimony in Germany even though I am a U.S. citizen? (although actually Germany doesn't tax alimony to the recipient)
If I, the recipient live in the U.S. and my ex, a German lives in Germany, he will be unable to deduct his alimony payments as I am not living in the EU and therefore I am not taxed in my resident country of the U.S., correct? In other words, I do not have to pay taxes on my alimony whether I live in Germany (since that is their law not to tax the recipient) or in the U.S., if my spouse lives in Germany. If he moves to the U.S. as well though (as a german citizen), then he would get a deduction in the U.S. and I would pay taxes on the alimony then?
Now I am more confused, as there seems to be some contradictory statements.
If I receive alimony from my german ex-spouse who lives in Germany (and I live in the U.S.), then who do I owe what amount in terms of taxable alimony? Am I taxed by and pay the U.S. government or am I taxed and pay the German government? If I do have to pay, is it that 13,000 euro amount to Germany or the U.S.?
If we both live in Germany, I do not owe any alimony tax to the U.S, correct?
Okay, that made it very clear. Thank you for all of your help!!
No problem, I have rated your answers as excellent and if anyone reads this, would recommend you highly