Alimony and IRS

[660Griz]

What is the name of your state? Georgia

Divorce decree states that I must pay for my ex's house unless she remarries. I have relenquished all rights, title and interest on the house. It is deeded in her name only. If she sells it, I receive no money.

Claimed the house payments as alimony on taxes. IRS denied. I sent them proof. They deny because it did not pass all test for being alimony.

From the IRS " The payments made to the 3rd party do not end at the wife's death, so therefore they are not deductible as alimony."

Well, if they think I am going to buy my ex a house after she is dead, they have another thing coming. Called the Tax Adv group. They are working it but were stumped with such a thing that should be 'common sense'.

Anybody know what proof I can send the IRS that I am not going to pay for my ex's house if she dies? Other than my word.

I have gone through Georgia legal code and can't find anything absolute.

 

[Ohiogal]

Apparently your decree does not say it ends upon death. Hence you would be in contempt if you do not continue paying for the house. Hence it is NOT alimony.

 

[LdiJ]

What is the name of your state? Georgia

Divorce decree states that I must pay for my ex's house unless she remarries. I have relenquished all rights, title and interest on the house. It is deeded in her name only. If she sells it, I receive no money.

Claimed the house payments as alimony on taxes. IRS denied. I sent them proof. They deny because it did not pass all test for being alimony.

From the IRS " The payments made to the 3rd party do not end at the wife's death, so therefore they are not deductible as alimony."

Well, if they think I am going to buy my ex a house after she is dead, they have another thing coming. Called the Tax Adv group. They are working it but were stumped with such a thing that should be 'common sense'.

Anybody know what proof I can send the IRS that I am not going to pay for my ex's house if she dies? Other than my word.

I have gone through Georgia legal code and can't find anything absolute.

Is the mortgage in her name only?...if not, your responsibilty to the mortgage does NOT end at her death.

The IRS are real stickers on the alimony rules because so many people have tried to disguise property settlements or child support as alimony.

 

[tranquility]

Not only what LdiJ wrote, but I believe the document requiring the payments must specifically state the payments would end at death.

 

[TinkerBelleLuvr]

Alimony 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.

Payments to a third party. Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. See Payments to a third party under General Rules, earlier.

Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met.
The payments are in lieu of payments of alimony directly to your spouse.

The written request states that both spouses intend the payments to be treated as alimony.

You receive the written request from your spouse before you file your return for the year you made the payments.

Liability for payments after death of recipient spouse. If any part of payments you make must continue to be made for any period after your spouse's death, that part of your payments is not alimony whether made before or after the death. If all of the payments would continue, then none of the payments made before or after the death are alimony.

The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law.

Substitute payments. If you must make any payments in cash or property after your spouse's death as a substitute for continuing otherwise qualifying payments before the death, the otherwise qualifying payments are not alimony. To the extent that your payments begin, accelerate, or increase because of the death of your spouse, otherwise qualifying payments you made may be treated as payments that were not alimony. Whether or not such payments will be treated as not alimony depends on all the facts and circumstances.

http://www.irs.gov/publications/p504/ar02.html#d0e2117

What does it say in your court order about stopping the house payments?

 

[660Griz]

THe house is entirely in her name. The divorce decree states that I stop paying if she remarries or cohabitates.

Of course you would stop alimony upon death unless otherwise stated.


Oh well.

This from the IRS page spells out my situation exactly.

Under your separation agreement, you must pay the real estate taxes, mortgage payments, and insurance premiums on a home owned by your spouse. If they otherwise qualify, you can deduct the payments as alimony on your return, and your spouse must report them as alimony received. If itemizing deductions, your spouse can deduct the real estate taxes and, if the home is a qualified home, also include the interest on the mortgage in figuring deductible interest. However, see the first example under Payments not alimony, earlier, if you owned the home, and Table 5, later, if you owned the home jointly with your spouse.

 

[660Griz]

Is the mortgage in her name only?...

Yes it is.

The IRS are real stickers on the alimony rules because so many people have tried to disguise property settlements or child support as alimony.

I sent them ample proof that everything I was claiming was mortgage related.

 

[660Griz]

Apparently your decree does not say it ends upon death. Hence you would be in contempt if you do not continue paying for the house. Hence it is NOT alimony.

Are you sure? Please provide the Georgia code which states this. This is what I need.
State law that tells me for sure one way or another.

From IRS again:

The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law.

 

[LdiJ]

Yes it is.



I sent them ample proof that everything I was claiming was mortgage related.

Ok...are you paying for the house in lieu of her getting any other assets from you? Such as a 401k distribution?

Apparently there is no clause indicating that the payments end at her death. However, if you are on the mortgage, you would obviously have no liability after her death.

I would suggest getting a tax professional involved, and perhaps even the taxpayer's advocate. You should appeal the decision. I can't guarantee that you will prevail, but you really should try.

However, if there are any clauses at all in the agreement that could make this appear to be a property settlement rather than spousal support/alimony, then you will NOT prevail.