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socrateaser
socrateaser, Lawyer
Category: Tax
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Experience:  Retired (mostly)
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I was divorced 11/2014. court case. I was ordered to pay all

Customer Question

I was divorced 11/2014. Nasty court case. I was ordered to pay all mortgages, insurance, taxes.ect. Judge ordered me not to file my 1040/740 income tax for 2014 in Feb and June 2014. I filed an extension until 10/15/2014 and filed on 10/15/2014. I followed IRS 504 guide. Now, the judge ruled 2/1/2015 that I must split the property tax on my mother's house (bill to me from her state) with my ex even though, her name is ***** ***** on the bill, and she has no ownership nor do I. I cannot find anywhere in the IRS504 guide for any guidance. My family court attorney said I must follow the judge's decision because I used martial money. Also, I had a stock purchase plan with my company. Only my name on it. The judge gave my ex half. My attorney tells me it is not consider alimony. Can I deduct it as such. The IRS504 guide said you can deduct cash. My ex cashed out the stock and spent the money?
Submitted: 9 months ago.
Category: Tax
Expert:  emc011075 replied 9 months ago.

Hi. My name is ***** ***** I will be happy to help you.

IRS only deals with income and taxes. Divorce/property settlement are not covered in IRS publications.

To be treated as alimony payments or payment must meet certain conditions:

  • You and your spouse or former spouse do not file a joint return with each other
  • You pay in cash (including checks or money orders)
  • The payment is received by (or on behalf of) your spouse or former spouse
  • The divorce or separate maintenance decree or written separation agreement does not say the payment is not alimony
  • If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment
  • You have no liability to make the payment (in cash or property) after the death of your spouse or former spouse, and
  • Your payment is not treated as child support or a property settlement

Usually, division of asset during divorce is not considered alimony. If the judge ruled that your ex is entitled to 1/2 of your stock purchase or 1/2 of real estate held in your name, it is division of asset, not alimony payment.

You cannot treat it as taxable alimony. Sorry if this is not the answer you were hoping for.

Expert:  emc011075 replied 9 months ago.

Any questions? Is there anything else I can help you with today?

The issue with the alimony is that it as to be reportable by your ex as income in order for you to deduct it. Assets between spouses during divorce is transferred tax free therefore it cannot be treated as alimony.

Customer: replied 9 months ago.
Ok, I get the information on my stock. I can live with that. The IRS does deal with divorce. Its in the IRS 504 divorce guide. Since I pay for all the mortgage plus tax, I am legally able to deduct half as alimony, Table 4. It must be co-owned and I pay all with court order. My mother's house is not co-owed. How can my ex deduct half my mother's tax bill on her 1040? I am not the owner, but I pay for my mother's property tax. The bill is addressed to me and I have been taking the deduction.
Expert:  emc011075 replied 9 months ago.

Well, it seems like we have different opinion on certain issues so let me opt out and let another expert help you.

Expert:  socrateaser replied 9 months ago.

Hello,

Different contributor here. Please permit me to assist.

1. Unlike most of the tax category contributors who answer questions here at justanswer.com, I am an attorney, and I don't do accounting or prepare tax returns (not that there is anything wrong with those who do this functions). Rather, I argue the law -- and the law is routinely very different from what the IRS provides in its publications and various guides. To wit: "It is hornbook law that informal publications all the way up to revenue rulings are simply guides to taxpayers, and a taxpayer relies on them at his peril." Caterpillar Tractor Co. v. United States, 589 F.2d 1040, 1043 (Ct. Cl. 1978).

2. Because of the above admonition from the federal court of claims, when I observe participants here debating over the rules provided in an IRS publication, I feel obliged to step into the fray.

3. The law concerning the deductible character of spousal support (aka alimony or maintenance), is codified in 26 U.S.C. § 71(b)(1), and is defined as follows:

  • (A) such payment is received by (or on behalf of) a spouse under a divorce or separation instrument,
  • (B) the divorce or separation instrument does not designate such payment as a payment which is not includible in gross income under this section and not allowable as a deduction under section 215,
  • (C) in the case of an individual legally separated from his spouse under a decree of divorce or of separate maintenance, the payee spouse and the payor spouse are not members of the same household at the time such payment is made, and
  • (D) there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment (in cash or property) as a substitute for such payments after the death of the payee spouse.

Your facts suggest that the payments you are making are not received by your ex spouse, but they are being used for the purpose of satisfying a debt of your ex-spouse owed for property taxes. You could certainly argue that the payments are being received on your ex's behalf, since if you were not paying the property tax, your ex would be obligated to pay. In fact, Treas. Reg. 1.71-1T(b)A-6 expressly states that a payment to a third party, such as a mortgage or tax payment qualifies as spousal support under the Internal Revenue Code, as long as all of the other requirements of Section 71 are satisfied.

Consequently, the answer to your question here, at least based upon the limited information about your circumstances that I have at my disposal, is "yes," you can deduct the payments as spousal support.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer -- otherwise, I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

Expert:  socrateaser replied 9 months ago.

Hello again,

I see that you have reviewed my answer, but that you have not provided a rating. Do you need any further clarification concerning my answer, or is everything satisfactory?

If you need further clarification, concerning this matter, please feel free to ask. If not, I would greatly appreciate a positive feedback rating for my answer -- otherwise I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

Customer: replied 9 months ago.
The first person that answered, was wrong about the IRS not using IRS504 tables for divorce. Then you picked it up. My question was still not answered. I know I can deduct 1/2 the joint home as alimony. It is right in table 4 under the IRS guide. My question was: I pay my mother's tax's for her because she is elderly. The judge gave my ex wife have my mother's tax deduction. My name and my ex wife's name is ***** ***** the house. I do not think my ex has the right to use 1/2 my mother's tax deduction. The judge only gave her have because I used martial money. I really am not happy with either answer. I am out of $45 and did not get the question answered. I'm just going to let it go and let her have the tax deduction. That way the Judge doesn't get mad. My ex will have to answer to the IRS if they audit her.
Expert:  socrateaser replied 9 months ago.

I apologize if I misunderstood your question. I will send this session to customer service, and they will refund your money.

Thanks again for using Justanswer!

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