Can I Get Credit for Paying Alimony to My Ex-Wife?
Question:
I went through a divorce several years ago and was ordered to pay alimony to my wife. I have been claiming those payments as a deduction on my income tax because I thought my lawyer said I could. Now, I received a letter from the IRS that they are not allowing my claim for alimony and I owe a lot of money in back taxes. What can I do?
Answer:
Well, you have several options. First of all, the IRS can allow your deductions for alimony as long as they are truly alimony payments which meet six requirements:
- You and your ex-spouse must not file a joint tax return for the years you are claiming the deduction for alimony;
- You must pay in cash or a cash equivalent such as check or money order;
- The divorce decree or separation agreement requiring payment to your ex-spouse cannot specifically state that the payments are not to be considered alimony;
- You and your ex-spouse may not live in the same residence;
- You are not required to continue making payments after your ex-spouse dies; and finally
- You payment cannot be treated as child support because child support is never deductible.
The first thing you can do is appeal the examination that caused this new tax liability. There are generally a couple levels of appeal – up to the U. S. Tax Court. You should provide proof of your alimony payments such as cancelled checks, receipts, etc, you should also provide copies of your divorce decree or any Court Orders requiring you to pay "alimony," and any other information that you believe would be relevant to the IRS for consideration of your claim.
If you are still unsuccessful in getting the IRS to accept your claim for the deductability of your alimony payments you will have the same options of settling that liability as any other taxpayer who owes the IRS money – namely, through an offer in compromise or an installment agreement. The problem with an offer in compromise in this type of situation is that the liabilty is generally not very large and that makes it extremely difficult to negotiate the IRS much lower; however, on the positive side, it makes negotiating a more reasonable installment agreement/payment plan much easier and much more likely that you will be able to better afford those monthy payments.
Powered by Qumana
Did you enjoy this post? Why not leave a comment below and continue the conversation, or subscribe to my feed and get articles like this delivered automatically to your feed reader.
Comments
No comments yet.
Leave a comment