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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16547
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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If I pay alimony for 2014 up front (all 12 months) in 2013

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If I pay alimony for 2014 up front (all 12 months) in 2013 can I take the tax deduction in 2013 as long as the check is dated in 2013? I need the tax deduction this year versus next.

Megan C :

Thank you for your question. MY name is XXXXX XXXXX I will be happy to help you.

Megan C :

You can do this, provided that your ex receives the funds in 2013. You can't write the check, then send it in 2014. They have to receive the funds in 2013.

Megan C :

This will create taxable income for them in 2013 and a tax deduction for you in 2013.

Megan C :

They would have no taxable income from alimony in 2014 unless you prepaid again at the end of the year

Megan C :

Keep in mind that this may create a higher tax burden for your ex.

Megan C :

Also, this is true so long as you are a cash basis tax payer. 99% of individuals are cash basis so this is the general assumption.

Customer:

What if I give it to her in 2013 but she cashes it in 2014? That's the likely scenario

Customer:

I'll definitely write check in 2013 but presume she'll deposit and thus receive funds in 2014

Megan C :

She still has constructive receipt in 2013 - she has the ability to cash it. That determines when it's taxable. Plus, if you deduct it the IRS will look to her return to have it on there.

Megan C :

So, even if she cashes it in 2014, if you hand it to her in 2013 that's when it's taxed

Megan C :

You can't smooth your taxable income by choosing when to deposit checks.

Customer:

ok, thank you.

Megan C :

you're welcome

Megan C :

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