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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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My divorce decree had me paying alimony months. When

Customer Question

My divorce decree had me paying alimony for 97 months. When that ended my ex wife asked for 50% of my military retirment pay. This was more $$$ and she was happy. Now the IRS is doing a audit on that change over year. We own a house jointly so we keep a join banking account. The IRS is saying that the $15k I paid her out of my retirement pay (for the change over year) can not be consider alimony payments but would they condider them some time of payment that I could claim as an deduction?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Unfortunately - you may ONLY deduct alimony.However - for payments - to be treated as alimony - please see IRS pub 504 - Requirements. A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met.-- The payment is in cash.-- The instrument does not designate the payment as not alimony.-- The spouses are not members of the same household at the time the payments are made. This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance.-- There is no liability to make any payment (in cash or property) after the death of the recipient spouse.-- The payment is not treated as child support..So - if all these requirements are satisfied - payments are deductible for the payer, but must be reported as taxable for the recipient.
Expert:  Lev replied 2 years ago.
Payments that you agreed with your ex-spouse - and that are not based on the divorce or separation instrument may not be considered as alimony - the IRS generally treats these are property settlement or as gift - and neither may be deducted.Regarding your military retirement pay - that is YOUR taxable income - and it is reported on your tax return regardless how the money are used. Some military retirement benefits might be not taxable - for instance Division of the retirement pay is classified as division of assets - and as such - may not be deducted as alimony.However when properly divided - that payment is reported to your ex-spouse - not to you - so that amount is excluded from your taxable income (if otherwise it is taxable)Please see here - Are USFSPA retired pay as property payments taxable to the former spouse?Yes, they are considered taxable income to the former spouse. DFAS is required to issue the former spouse a Form 1099-R each year reporting the former spouse’s portion of retired pay. USFSPA retired pay as property payments are also subject to federal income tax withholding (FITW). In some cases the monthly retired pay amount will fall under the threshold FITW. There is no separate income tax reporting or child support payments made under the USFSPA. A former spouse may want to consult a tax professional concerning the reporting of USFSPA payments.