I'm going to try to make this as concise as possible.
I have been going through the divorce from hell starting in the spring of 2011.
This question is in regards XXXXX XXXXX 2011 tax
return. My wife filed for divorce in early spring of 2011 and by the end of the year the divorce had not been finalized or settled. However, a few weeks after the divorce was filed, I had bought a house and established my own household. Over the course of 2011, I paid my wife directly (by checks written directly to her) more than $26,000. So last April, I had been told by both my divorce attorney as well as my CPA that because we did not have an agreement in place or a signed decree, that all that money I paid her was not relevant from a tax standpoint. It is important to note at this point that although there was no decree from the judge or signed agreement in 2011 we were working under the boilerplate Pendente Lite for my state for divorce cases. I did my best to pay her according to that Pendente Lite document and I have documentation stating that whenever I paid her X amount from my paycheck, a certain amount was intended for "expenses" (essentially alimony) and another amount was intended for child support.
So when it came time to file, she did her own thing and filed as a single person and did not claim any of the money I paid her as income and I got screwed royally by her unilateral actions and ended up owing the IRS more than $5000. For the record, she was unemployed for most of 2011 and had very little income of her own.
Well, recently, I was actually reading the IRS publication on divorce and alimony (Pub 504) and was shocked to see the following statement describing a valid divorce instrument for tax purposes.
"A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement)."
Upon reading that it became obvious to me that I may be able to amend my 2011 return and deduct some of what I paid her in 2011, thereby reducing my taxable income
and perhaps not owe the IRS so much money.
FOR THE RECORD
**First, I understand that child support is not deductible but that alimony is.
**Second, I understand that alimony is deductible to me but must be declared as income by the spouse receiving alimony. (So it's a tax deduction
for me and taxable income for her).
SO MY QUESTIONS ARE
1) If I file an amended return
for 2011 where I deduct some of what I paid her as alimony how does the IRS handle the fact that she did not declare that alimony as income? I want to reiterate that I think the documentation I have is pretty indisputable in terms of what money I intended to be child-support and what money I intended to be for her "expenses" and / or "spousal support". I basically sent her an email every paycheck saying here's what I am doing and broke down the exact amounts and what they were intended for.
2) If I amend my return, I assume she would have to amend hers? What if she refuses to do so?
3) Would my amended (but disputed) return force an audit on hers or both of our returns?