Alimony paid on gross income...

[schinitz]

What is the name of your state (only U.S. law)? CT

I am recently divorced and after mediating our separation agreement we agreed that I would pay 55% of my total gross income in alimony. I made my first payment in January and have another one coming up at the beginning of February. My question is this; I have to pay her off of my gross income, but my take home pay is obviously net of taxes and other deductions. I know that that alimony payment is tax deductible to me, but the gross number that I have to pay almost equals my net take home pay...within $300. Do I have to wait until April 2013 to take that deduction and get money back from the government? How am I supposed to live month to month if I have to pay her all of my wages. How do others do this? Any help would be greatly appreciated.

 

[TinkerBelleLuvr]

What is the name of your state (only U.S. law)? CT

I am recently divorced and after mediating our separation agreement we agreed that I would pay 55% of my total gross income in alimony. I made my first payment in January and have another one coming up at the beginning of February. My question is this; I have to pay her off of my gross income, but my take home pay is obviously net of taxes and other deductions. I know that that alimony payment is tax deductible to me, but the gross number that I have to pay almost equals my net take home pay...within $300. Do I have to wait until April 2013 to take that deduction and get money back from the government? How am I supposed to live month to month if I have to pay her all of my wages. How do others do this? Any help would be greatly appreciated.

Then adjust your federal withholding to make it to the 45% that you'll be paying on.

I'm not even going to ask why you would agree to this.

 

[schinitz]

Adjusting withholding

Thanks for the answer. Are you saying to take like 15 deductions to get to the paycheck number that I should be getting every 2 weeks minus the alimony payment? The 45% in essence. Just play with the deductions then? Is there a max number that I can declare? Thanks again.

 

[mistoffolees]

Thanks for the answer. Are you saying to take like 15 deductions to get to the paycheck number that I should be getting every 2 weeks minus the alimony payment? The 45% in essence. Just play with the deductions then? Is there a max number that I can declare? Thanks again.

That's right. When you fill out your W4, there is a space where you can add additional deductions if you have much higher deductible expenses than normal. There are instructions to help you calculate where to put the number. There is no maximum.

I remember one year I used '23' as my number of exemptions on the W4 - and still ended up getting a refund.

 

[Bali Hai]

Then adjust your federal withholding to make it to the 45% that you'll be paying on.

I'm not even going to ask why you would agree to this.

Whatever the reason for agreeing, it was insane and still is.

 

[mistoffolees]

Whatever the reason for agreeing, it was insane and still is.

It may be. OTOH, for all we know, OP kept $20 M in marital assets in exchange for the overly generous alimony.

OP agreed to it, so it's his choice.

 

[LdiJ]

What is the name of your state (only U.S. law)? CT

I am recently divorced and after mediating our separation agreement we agreed that I would pay 55% of my total gross income in alimony. I made my first payment in January and have another one coming up at the beginning of February. My question is this; I have to pay her off of my gross income, but my take home pay is obviously net of taxes and other deductions. I know that that alimony payment is tax deductible to me, but the gross number that I have to pay almost equals my net take home pay...within $300. Do I have to wait until April 2013 to take that deduction and get money back from the government? How am I supposed to live month to month if I have to pay her all of my wages. How do others do this? Any help would be greatly appreciated.

I agree with the other responses you received but I am going to make a point that might be overlooked....

If some of what you are paying is child support, that is not deductible. If some of what you are paying is an installment payment on the property division that is also not deductible.

Something is definitely "off" here.

 

[Bali Hai]

It may be. OTOH, for all we know, OP kept $20 M in marital assets in exchange for the overly generous alimony.

OP agreed to it, so it's his choice.

You are referring to a property settlement. If that's the case, OP will be in big trouble if he takes the full alimony deduction as he is attempting to do.

I'm inclined to believe if OP legitimately has a deduction for alimony or not, a huge red flag will be sent up at the IRS when he files his return claiming 55%of his income as alimony paid.

He will be audited either way so he better get it right.

 

[Proserpina]

The content of my advice is factual and based on true events.

Really, Bali?

You might want to re-word that. Just saying.

 

[Bali Hai]

Really, Bali?

You might want to re-word that. Just saying.

What do you suggest?

 

[LdiJ]

You are referring to a property settlement. If that's the case, OP will be in big trouble if he takes the full alimony deduction as he is attempting to do.

I'm inclined to believe if OP legitimately has a deduction for alimony or not, a huge red flag will be sent up at the IRS when he files his return claiming 55%of his income as alimony paid.

He will be audited either way so he better get it right.

I agree that if he takes a deduction for 55% of his gross as an alimony deduction he is VERY likely to get audited...unless his ex claims an equal dollar amount of alimony income.

 

[Bali Hai]

I agree that if he takes a deduction for 55% of his gross as an alimony deduction he is VERY likely to get audited...unless his ex claims an equal dollar amount of alimony income.

Even if the ex claims an equal amount of alimony income, his tax savings are very likely to far exceed her tax liability which may even turn out to be zero.

Do you believe the IRS will like the fact that he is getting a huge tax savings and his ex is paying no tax from a property settlement disguised as alimony?

 

[tuffbrk]

Frankly, I don't get it. 55% in alimony? Then take into account state and federal taxes, presumably insurance(s) - what can you possibly be left with?

 

[mistoffolees]

Frankly, I don't get it. 55% in alimony? Then take into account state and federal taxes, presumably insurance(s) - what can you possibly be left with?

Actually, if OP is paying 55% pre-tax, then they are probably left with roughly equal amounts after tax.

While I would strongly oppose terms like that, OP chose to pay it.

 

[Bali Hai]

Actually, if OP is paying 55% pre-tax, then they are probably left with roughly equal amounts after tax.

Who is claiming the kids and HOH? Probably her.

While I would strongly oppose terms like that, OP chose to pay it.

Tough luck for OP, better luck next time huh?