How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Phillip B, EA Your Own Question

Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 646
Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
20877915
Type Your Tax Question Here...
Phillip B, EA is online now
A new question is answered every 9 seconds

If my ex-husband pays me alimony (he is German and lives in

Customer Question

If my ex-husband pays me alimony (he is German and lives in Germany) and I am American and live in the U.S., do I have to pay taxes on the alimony in the U.S if he does not get a tax reduction in the U.S. since he does not have to file taxes in the U.S.? What if we both live in Germany, do I have to pay taxes on my alimony if I am a resident of Germany but a U.S. citizen, when I fill out my U.S. tax return?
Submitted: 2 years ago.
Category: Tax
Expert:  Phillip B, EA replied 2 years ago.
Thanks for using JustAnswer.com!

Per the Article 18 of the US-German tax treaty, alimony (means periodic payment made pursuant to a written separation agreement or a decree of divorce,
separate maintenance, or compulsory support -- not child support) is taxable to the recipient in the country where they reside. Here is the link to the treaty: http://apps2.irs.gov/pub/irs-trty/germany.pdf

According to my international tax research sources and the US-German treaty, alimony is taxable to the recipient in Germany as it is in the US. If you were living in Germany, the alimony would be taxable on your German return and non-taxable on your US return as mentioned in the paragraph above.

If this answers your question, please rate my performance between OK and Excellent so that I may be paid. If you have further questions or need clarification, please reply to this answer so that I may assist you further.
Customer: replied 2 years ago.

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)

Expert:  Phillip B, EA replied 2 years ago.
To a certain extent, "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'" is a correct assessment of taxable alimony. However, in international matters, the IRS will simply follow the treaty to the letter. If the treaty allows the IRS to tax income, they will do so regardless of the related underlying principles in US law.

If the alimony is deductible in Germany (or the payers resident country) it is taxable to the recipient in their resident country (since you live in Germany, you will pay German taxes on the Alimony you receive). However, as you pointed put, nondeductible alimony would only be taxable to recipient in the country of payment (since your alimony in non-deductible in Germany, it is not taxable to your US spouse).

Let me know if there is anything else that I can do.
Customer: replied 2 years ago.

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?

Expert:  Phillip B, EA replied 2 years ago.
Sorry that it took so long to get back with you. I was sleeping at the time:)

I have spent the morning making sure I was understanding the treaty correctly on this issue, and here is what I found.

First, you may want to verify the issue as to whether you can deduct your alimony payments to your US resident ex-spouse. I was double checking myself, and I found an additional clause in the US-German tax treaty in Paragraph 16 of Article 18 that allows a deduction to a German resident who pays alimony to a US resident up to the allowable alimony deduction if the recipient was subject to German taxes. This means that your alimony payments to a US resident are deductible in Germany (up to the maximum German alimony deduction) and taxable to the US recipient (up to the maximum German alimony deduction).

Because of Paragraph 16 in Article 18 of the US-German treaty, the alimony paid by your ex-spouse is deductible to him regardless of whether you live in Germany or the US. Since you live in Germany, the alimony you receive is taxable in Germany up to the maximum alimony deduction. The alimony, whether living in Germany or the US, is taxable in the country of the recipient's residency.

From my understanding of the technical explanation of the treaty, if you are living in the US and you receive alimony from a German resident ex-spouse, the alimony received would only be taxable in the US up to the German maximum alimony deduction of 13,805 EUR (I'm not sure if this figure is current or not, but it is the most recent figure I can find) and anything paid to beyond this figure would fall out under Paragraph 4 of Article 18. For the German resident ex-spouse, the alimony paid to you (if you were a US resident) would be deductible up to the 13,805 EUR limit.

If he and you both moved to the US, all of the alimony he pays you would be fully deductible to him and fully taxable to you under US tax law.

To recap:

According to the US-German treaty, the alimony you receive is taxable wherever you live and deductible under the laws of the country you reside in. If the recipient and payor live in Germany, the alimony is taxable and deductible under German tax law. If the payor is in Germany and the recipient is in the US, the alimony appears to be deductible and taxable up to the German maximum alimony deduction. If both you and your German ex-spouse moved to the US, the alimony would be taxable and deductible under US law.

Hopefully this is clearer than mud. Let me know if you need me to provide more clarity. Thanks for asking this question, it has been fun research

Technical Explanation of the US-German treaty: http://www.irs.gov/pub/irs-trty/germtech.pdf
Customer: replied 2 years ago.

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?

Expert:  Phillip B, EA replied 2 years ago.
Sorry about the confusion. I had to double check treaty documents a couple of times to make sure I finally had the right answer. Paragraph 3, 4, and 16 of Article 18 are the important sections of the US-German treaty on this issue. The technical explanation of the treaty also provides some clarity.

1.) Alimony from German ex-spouse to US resident -- The alimony is deductible to the German ex-spouse in Germany. The maximum deduction for alimony for the German resident is 13k € or (if less than the maximum) the total alimony paid. The alimony is taxable in the US to the US resident up to the deductible alimony of the German payor. The US resident recipient is only taxed by the US, not Germany. The taxable alimony for the US resident is limited to the 13,000 € amount.

2.) Alimony to and from German residents -- This would be taxable and deductible under German law only. Nothing would be taxed or deducted on a US return for this scenario.

Again, sorry for the difficulty. Hopefully this clears things up.
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 646
Experience: Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
Phillip B, EA and 2 other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Okay, that made it very clear. Thank you for all of your help!!

Expert:  Phillip B, EA replied 2 years ago.
I'm glad. Please remember to rate my performance so that I may be paid. Thank you so much, have a great day.
Customer: replied 2 years ago.

No problem, I have rated your answers as excellent and if anyone reads this, would recommend you highly

Expert:  Phillip B, EA replied 2 years ago.
Thank you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
 
 
 
Chat Now With A Tax Professional
Phillip B, EA
Phillip B, EA
Tax Advisor
536 Satisfied Customers
Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.