@Oliver7088 wrote:
Update.. the divorce decree states that I will receive a portion of his
GROSS retirement based on an equation of years of marriage and years of his service. So maybe the military could send me a 1099R. but they won't because of their strict rules!
"My portion of his military retirement is per the decree a property settlement.... something we both contributed to during our marriage (during his active duty status, I moved 7 times to support his career)."
Again, the property division is not taxable, but retirement income from a tax-deferred pension is always taxable to someone. In other words, he transferred something valuable to you in 1998--a future interest in retirement income. That future interest had a present value in 1998 that you did not pay tax on. But someone has to pay tax on the income when it was withdrawn, because no income tax was paid during the period in which the money was vested.
If the court order says he pays you a portion of his gross pension, then I would say that you owe income tax on your portion and he owes income tax on his portion. This would normally be accomplished by getting a QDRO (qualified domestic relations order) requiring the pension trustee or IRA custodian to put a portion of the money into an account in your name, make payments directly to you, and issue you a 1099-R for whatever is paid to you. Most courts understand this and will make each party responsible for their own taxes on their own share of the income.
This should apply to a military pension as well, but it would not surprise me if the government exempted itself from their own rules.
Contra @Critter-3 , I think he can issue you a 1099-R. See this from the IRS general instructions for 1099 forms.
Nominee/middleman returns.
Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts allocable to each. You must also furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 with the IRS Submission Processing Center for your area. On each new Form 1099, list yourself as the "payer" and the other owner as the "recipient." On Form 1096, list yourself as the "Filer." A spouse is not required to file a nominee return to show amounts owned by the other spouse. The nominee, not the original payer, is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.
And see this from the IRS instructions for the 1099-R.
Military retirement annuities.
Report payments to military retirees or payments of survivor benefit annuities on Form 1099-R. Report military retirement pay awarded as a property settlement to a former spouse under the name and TIN of the recipient, not that of the military retiree.
If I was your ex, I would issue a 1099-R to you for your portion, and I would only report and pay taxes on my portion.
If your argument is that you are entitled to a gross amount tax-free and that your ex is responsible for all the taxes, you will likely have an fight on your hand, but I don't know who with. Probably with your ex in the Virginia family court. Federal law generally overrides state law, including tax matters. If the IRS accepts his 1099-R, they will expect you to report the income and pay tax. If you argue, and the IRS concludes that your spouse is a nominee with respect to your portion of his military pension, that's how the IRS will handle it. The state court could modify the order by giving you a bigger percentage of his pension, so you net out the same, or could issue a ruling that it was their intent for your ex to pay all the taxes, and order him to reimburse you. But if the IRS concludes that as a matter of federal law, the pension settlement was a property transfer, they will probably agree with your ex.
