If I receive the military retirement 1099-R and claim the alimony credit is it equal to if she received her own 1099-R and me not receive a credit?

[Navysubmariner]

Which one would I come out ahead or would they equal out?

[Anonymous_]

@dmertz?

[Opus 17]

If you have a QDRO (qualified domestic relations order), and if DFAS will honor it and split your retirement pay and issue a separate 1099-R to your ex-spouse, that is definitely the way to go.  It is cleaner, simpler, and hassle-free.

There is no alimony "credit".  Alimony is tax-deductible to the payer and taxable to the recipient only if the divorce was final before January 1, 2019.  For any divorce that was final after January 1, 2019, there is no tax deduction for alimony.  If you receive your entire military retirement benefit and then send part to your spouse because of an alimony order, you must pay the income tax on the entire benefit.  There's no way to make your ex-spouse pay tax on their share of the benefit.   (You could try and argue to the family court that the alimony award should be reduced, since you have to pay all the tax.  But there is no way to make your spouse pay the income tax.)

For a divorce that was final before December 31, 2018, where you can deduct alimony and your spouse must report it as taxable, there is no financial difference between doing that and submitting the QDRO to DFAS.  I would still submit the QDRO as that makes the whole situation much easier for you.  You don't have to keep sending checks to your ex because DFAS does it, and you don't have to argue with your ex about taxes since DFAS will issue a 1099-R. 

[Navysubmariner]

we divorced in 2013. So it’s taxable for both of us. And she has never filed on her end. And I’ve been receiving the 1099-R and taking the hit because we’re not having enough taxes taken out during the year only $220 in state and only $485 in federal for the year. So even though I would get the alimony credit it would be more if we had the proper amount of taxes come out during the year. But when we filed for divorce she wouldn’t sign the papers unless I agreed to continue to give her my retirement she’s getting my retirement (full retirement and my disability), my daughter was still young and I was still working so I agreed not realizing how screwed I would be later on (now 10 years later). I didn’t know at the time that the law was that she was only entitled to up to 50% of the taxable amount and none of my disability. now my health has declined and I’m looking into retirement with SSI and I can’t afford to and lawyers are telling me that it will be hard to try to get a modification now to try to get back what is rightfully mine. Luckily though she mandated in the divorce that we put a set amount which is what my full retirement was at that time. And you know that with COLA the amounts have drastically increased to my benefit so I am making changes to get that portion back. As well as going to get reevaluated for my disability. I’ve only had the one check up when I first got it. I’ve never been back to get reevaluated and my health has drastically declined since. So I’m confident that my disability percentage will increase. I will fight to at least get my disability back from her as I cannot afford to retire with out it and with my health I cannot afford to work. But I just wanted to know how I come out ahead if I should continue to receive the 1099-R my self and claim the income tax then claim the credit or have them send her a 1099-R directly to her as if I never received the income. Does it equal out? Or is one way better than the other? It sounded like you said they would be the same. I just want to verify that is what I understood before I make the change to have the 1098-R go to her. Because yes, it would be less headaches 

[Opus 17]

@Navysubmariner 

Let's take a step back.

The DOD won't send your retirement to your ex unless you give them a qualified domestic relations order (QDRO) that specifies how much and so on.  I also believe the DOD won't honor a QDRO unless you were married at least 10 years.  So you will need to check with them to see if your current divorce order meets their requirements, or if you need to get some other paperwork from the divorce court.

Now under the current situation, you receive the entire benefit and send it to her, and you get the 1099-R and pay the taxes.  The taxes you pay include both the withholding and the extra you might owe, it's all taxes you pay, even though you never see some of it.  You are entitled to claim a deduction for the alimony, and when you claim the deduction on your tax return, you report your ex's SSN, and the IRS uses that information to see whether or not she is reporting the income on her tax return.  

Whether you get a benefit of the deduction depends on your overall income and other tax situations.  Whether your ex is actually required to pay tax depends on the amount of the alimony and her other income, deductions and tax situations.  But when you claim the alimony as a tax deduction, the IRS will get notified of that income to her.

If your question is "Will I pay less if the money and the 1099-R go directly to my ex?", the best answer is "Maybe".  It depends on your overall income and other tax situations.  Another way of putting it would be, "You won't pay more tax that way, and you might pay less, but someone would have to look at your financial situation in detail to figure it out for sure."