Answer: They Both Want to Know Where Your Alimony Check Is
It’s the worst part of the month. You have to fill out a check and write your ex-wife’s name on it. Paying spousal support is an irritating monthly reminder that she is still living off your money. The one bright spot in this miserable scenario is that those payments are tax deductible. At least giving some to your ex-spouse means you have to give less to Uncle Sam at the end of the year. Unfortunately, the Federal Government recently got 2 billion reasons to reexamine the only advantage to paying alimony.
Alimony payments must be reported by both the payer and the recipient on federal income taxes. Ex-husbands who pay spousal maintenance can list the payments as deductions. Ex-wives who receive alimony must list the payments as income. A recent federal audit of tax year 2010 discovered over $2 billion in alimony payments not reported as income. Nearly half of ex-wives in the United States receiving spousal support failed to claim it on their taxes.
If you are paying your ex-wife alimony, you might think it doesn’t matter to you whether she claims it on her taxes or not. After all, isn’t that between her and the IRS? While your ex-wife may face penalties for failing to report her spousal support, there are also IRS guidelines you must follow as the alimony payer.
You must include your ex-wife’s social security number on your tax return. It is not enough to simply total how much alimony you paid in the last year, you also need to tell the government who received your money. Failing to include this information could result in a $50 fine. Even worse, the IRS could disallow the deduction if they are unable to identify the alimony recipient. This would mean you could end up paying alimony twice, once to your ex-wife and once to the IRS as a lost tax deduction.
The billion dollar loss over unreported alimony for the 2010 tax year could result in changes to the tax code and stricter reporting requirements. Paying alimony could become even more painful if the federal government requires additional paperwork to claim the deduction. Just when you thought alimony couldn’t get any worse, honest men responsibly paying their alimony every month could be penalized because their ex-wives tried to cheat the government.
Divorce Lawyers for Men will keep you updated as this situation continues to develop.
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