Maintaining health insurance

[tuffbrk]

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

If you are court ordered to retain insurance on your ex can you claim any part of the premium? Would it count towards alimony? I have read conflicting opinions that as long as payments made to, or on the behalf of, your ex that cannot be defined as CS it can then be called alimony. Another blog states that you can only claim it against your out of pocket medical expenses. But of course that presumes that medical expenses is above X% of your annual salary from a federal filing perspective. My state is a bit more forgiving when it comes to medical expenses.

Just a bit confused as to whether payment of insurance is an expense that can be claimed at all.

 

[mistoffolees]

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

If you are court ordered to retain insurance on your ex can you claim any part of the premium? Would it count towards alimony? I have read conflicting opinions that as long as payments made to, or on the behalf of, your ex that cannot be defined as CS it can then be called alimony. Another blog states that you can only claim it against your out of pocket medical expenses. But of course that presumes that medical expenses is above X% of your annual salary from a federal filing perspective. My state is a bit more forgiving when it comes to medical expenses.

Just a bit confused as to whether payment of insurance is an expense that can be claimed at all.

Insurance on your ex can not be considered alimony unless the court order is very specific and meets all the IRS requirements for alimony. The rules are here:
Tax Topics - Topic 452 Alimony Paid

 

[LdiJ]

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

If you are court ordered to retain insurance on your ex can you claim any part of the premium? Would it count towards alimony? I have read conflicting opinions that as long as payments made to, or on the behalf of, your ex that cannot be defined as CS it can then be called alimony. Another blog states that you can only claim it against your out of pocket medical expenses. But of course that presumes that medical expenses is above X% of your annual salary from a federal filing perspective. My state is a bit more forgiving when it comes to medical expenses.

Just a bit confused as to whether payment of insurance is an expense that can be claimed at all.

Publication 504 states the following:

Payments to a third party. Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. These include payments for your spouse's medical expenses, housing costs (rent, utilities, etc.), taxes, tuition, etc. The payments are treated as received by your spouse and then paid to the third party.

Example 1.

Under your divorce decree, you must pay your former spouse's medical and dental expenses. If the payments otherwise qualify, you can deduct them as alimony on your return. Your former spouse must report them as alimony received and can include them in figuring deductible medical expenses.

Medical insurance falls under the IRS definition of medical expenses. So yes, its deductible as alimony and is income to him as alimony.

 

[mistoffolees]

Publication 504 states the following:



Medical insurance falls under the IRS definition of medical expenses. So yes, its deductible as alimony and is income to him as alimony.

Back up. That's only one of the requirements. There are other requirements as in the link I provided. For example:

- "The decree of divorce or separate maintenance does not say that the payment is not alimony". We don't know if that's true or not.
- "Your payment is not treated as child support or a property settlement". We don't know if that's true or not.
- "You pay in cash (including checks or money orders)". I don't know how the court rules on this. If it's paid by the employer (or some part of it is paid by the employer), that may disqualify it.

Furthermore, if they're legally separated rather than divorced, there are other exclusions that reply. It is important to read the entire section regarding whether alimony is deductible rather than just pulling out one paragraph.

 

[LdiJ]

Back up. That's only one of the requirements. There are other requirements as in the link I provided. For example:

- "The decree of divorce or separate maintenance does not say that the payment is not alimony". We don't know if that's true or not.
- "Your payment is not treated as child support or a property settlement". We don't know if that's true or not.
- "You pay in cash (including checks or money orders)". I don't know how the court rules on this. If it's paid by the employer (or some part of it is paid by the employer), that may disqualify it.

Furthermore, if they're legally separated rather than divorced, there are other exclusions that reply. It is important to read the entire section regarding whether alimony is deductible rather than just pulling out one paragraph.

I know the background on the OP's case so those questions are already answered for me.

Therefore I am confident of my response.

 

[mistoffolees]

I know the background on the OP's case so those questions are already answered for me.

Therefore I am confident of my response.

That's fine, but you gave a blanket statement which was incorrect based on the information available here. Someone else reading this thread would have gotten bad advice.

If you're relying on information not in this thread, you should really clarify that.

 

[LdiJ]

That's fine, but you gave a blanket statement which was incorrect based on the information available here. Someone else reading this thread would have gotten bad advice.

If you're relying on information not in this thread, you should really clarify that.

I should add that the answer to your last question is that the employee paid portion counts as "paid by cash or check" even if the employer is paying a portion of the insurance. However, in many cases the insurance being provided is Cobra coverage. That answer I knew as a tax professional.

 

[mistoffolees]

I should add that the answer to your last question is that the employee paid portion counts as "paid by cash or check" even if the employer is paying a portion of the insurance. However, in many cases the insurance being provided is Cobra coverage. That answer I knew as a tax professional.

That appears to be the case:
Publication 17 (2010), Your Federal Income Tax

"Cash payment requirement. Only cash payments, including checks and money orders, qualify as alimony. The following do not qualify as alimony.
Transfers of services or property (including a debt instrument of a third party or an annuity contract)."

It appears that the employer portion would fall under this paragraph. The employer paid amount probably counts as a transfer of their property. The employee paid amount should be OK.

 

[tuffbrk]

I was told that I could deduct it but was rather wary of doing so.

Thank you both so much.

 

[Bali Hai]

I was told that I could deduct it but was rather wary of doing so.

Thank you both so much.

Aren't these two senior members wonderful?

Never ask permission, always beg forgiveness.

 

[mistoffolees]

Aren't these two senior members wonderful?

Watch it or I'll have to add that to my signature, as well.

 

[tuffbrk]

Aren't these two senior members wonderful?

Never ask permission, always beg forgiveness.

Yes - two of my favorites actually.