Tax Issue With Alimony Paid Minus Child Support Received

[Bali Hai]

Originally Posted by LdiJ

Your expectations are too high. Its the responsibility of the parties before the judge to argue statutes and case law...and for the judge to make their decision based on those arguments.

IRS compliance agents are required to research the tax code before THEY make decisions. If something outside of the tax code effects a decision they may be making, it the responsibility of the taxpayer to bring that to their attention.

OP legitimately claimed the alimony paid as a deduction on his federal income taxes.

His STBX illegally did not declare the alimony as taxable income and defrauded the US government of collecting the tax owed on that income.

OP has the court order to support his claim, presented it to the IRS and the IRS has rejected it.

Your position is that OP must now convince a stupid judge with no knowledge of the law that he should prevail.

My position is that the government has rejected OP's alimony deduction, accepted his STBX's tax return, and, the GOVERNMENT must PROVE their case by using the law and case law to support its claim.

[LdiJ]

Originally Posted by Bali Hai

OP legitimately claimed the alimony paid as a deduction on his federal income taxes.

His STBX illegally did not declare the alimony as taxable income and defrauded the US government of collecting the tax owed on that income.

OP has the court order to support his claim, presented it to the IRS and the IRS has rejected it.

Your position is that OP must now convince a stupid judge with no knowledge of the law that he should prevail.

My position is that the government has rejected OP's alimony deduction, accepted his STBX's tax return, and, the GOVERNMENT must PROVE their case by using the law and case law to support its claim.

You have it slightly wrong. The IRS's determination is that the net amount his is paying for alimony is the amount he can deduct. His position (which I agree is the accurate position) is that the gross alimony (before the deduction for her child support) is the deductible amount.

The IRS has dug their heels in, so now its up to the tax court to decide. The situation is unusual, and that is part of the problem.

[Bali Hai]

Originally Posted by LdiJ

You have it slightly wrong. The IRS's determination is that the net amount his is paying for alimony is the amount he can deduct. His position (which I agree is the accurate position) is that the gross alimony (before the deduction for her child support) is the deductible amount.

The IRS has dug their heels in, so now its up to the tax court to decide. The situation is unusual, and that is part of the problem.

I agree with you and the "unusual situation" was created by another stupid judge!!

[Bali Hai]

Originally Posted by Chaz_NY

As I mentioned in my original posting, the final financial settlement is not complete. The only remaining issue in my case in New York State's infamous enhanced earnings award for an educational degree earned 24 years ago. Valuation of the enhanced earning power is a completely ficticious exercise. Given my ex-wife's recent behavior with respect to alimony declarations on taxes (or lack thereof) do you think I might get any leeway from the judge if I take them to trial over her share of the degree. She thinks she should get 50% of the enhanced earning value until I turn 65, even though I paid my way through graduate school (engineering degree) and did 50/50 of the work at home and taking care of one child. I think she should get 10% and have offered such. They are making noise about taking me to trial for more. The 10% offer that I am making would cover her cost to take me to trial. I heard about an important case called the 'Higgins Appeal' in New York State that came down in the last 1 or 2 years. In it the appeals court says that a spouse cannot share in the value of an educational degree unless they made more than ordinary contributions or sacrifices to help the degreed spouse obtain the sheepskin.

I wouldn't offer anything or trade any marital asset to her because she is not entitled. Your higher learning has more than enough "paid her back" with a higher standard of living during the marriage that she otherwise would not have enjoyed and benefited from.

A New York State Supreme Court Justice may not see it that way of course.

One caution, if the judge orders you to pay her in monthly payments for the enhanced earnings award, it is not deductible on your income taxes because it is part of the property settlement and should be called a "distributive award".

If the judge screws up and calls a distributive award a "maintenance award" and the payments are for the enhanced earnings award spelled out in the decree, the IRS still will not allow the deduction.