Where do i enter tax free income

[MichaelEgan007]

Through my divorce decree, I was awarded a portion of my ex spouses military retirement. It is disbursed to me after their taxes are deducted as directed by the divorce decree so I receive no irs forms on this income. I am in a situation now where I must fill out my own taxes which I've not done myself in the past because I'm disabled and for 20 years have received assistance. Where do I enter this income on my 1040? For the life of me, I can't find the appropriate box. Thank you

[VolvoGirl]

Who sends you your portion?  Your ex or the military?  If it comes directly from the retirement plan they should send you a 1099R each January to enter into your tax return.  If you get the 1099R it is taxable.  You might need to ask them for the 1099R.  Do they have your right address?

[MichaelEgan007]

I get from my ex directly and have done for 20 years now. It's her retirement that dfas disperses to her. She pay the taxes on it because it's her retirement. She then just sends me a personal check every month. I receive no 1099 or any forms from the irs or dfas. 

[Critter-3]

To enter alimony paid -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Deductions and Credits
• Click on I'll choose what I work on (if shown)
• Scroll down to Other Deductions and Credits
• On Alimony Paid, click the start or update button

Or enter alimony paid in the Search box located in the upper right of the program screen. Click on Jump to alimony paid

[MichaelEgan007]

It's not alimony though, it's an apportionment of military retirement. 

[VolvoGirl]

It can not be military retirement since your ex is paying you directly.  If it should be from the military it should have been setup as a QDRO and your part split off from her retirement account and you should be getting your own 1099R for your part.   Otherwise it may be considered  Alimony.  You may need to contact your lawyer and DFAS about it.  

[MichaelEgan007]

I'm starting to recognize the dumpster fire that this is. I did receive alimony for a period of time because she divorced me whilst I was undergoing back surgery. The military retirement portion is separate as written in the divorce decree. Basically,  "wife shall pay 26.25% of military retirement as well as the addition of yearly COLA increases in the same amount of 26.25% of the cola increase. She has paid me by check for at least 10 years then zelle was invented and she began transferring that money to my bank account. I don't see how it could be considered alimony but it would be extremely helpful if it were able to be classified as such, legally. 

[rjs]

You are not getting part of your ex-wife's military retirement. She gets the full amount of her retirement from DFAS. DFAS is not paying you. She is paying you. The amount she has to pay is a percentage of her retirement, but the payment comes from her. It doesn't make any difference whether she sends you a check or a Zelle payment. If the divorce decree does not say that it is not alimony, then it is alimony. (I'm not sure why that's helpful, but that's the rule.) Double check with your lawyer, with the caveat that many divorce lawyers know a lot less about tax law than they think they do. I don't see any need to contact DFAS. You have no connection with them.

Since you were divorced after 1984 and before 2019, you report it as alimony income on your tax return.

For all the details about alimony and taxes, see IRS Publication 504.

[MichaelEgan007]

The divorce decree DOES specifically state military retirement and states specifically that it be divided at the rate of 26.25% to me. 

It separately states alimony at the rate that was determined in a separate calculation. 

In the divorce decree there are separate paragraphs that separately describe military retirement disbursement and alimony disbursement. 

[rjs]

What you quoted from the divorce decree says "wife shall pay . . ." It doesn't say the military retirement will be divided between you, and in fact it is not divided. She gets the full amount. The decree just says that she will pay you an amount equal to 26.25% of the military retirement that she receives. That doesn't mean that what she pays you is military retirement. My understanding of the tax rules is that any payment that the decree says one spouse has to make to the other is considered alimony unless the decree specifically says that it is not alimony. It doesn't have to say that it is alimony. And it doesn't matter if there are separate payments in different paragraphs. If you're not sure, check with a local tax professional. That's probably better than asking your divorce lawyer. And read the Alimony section in Publication 504.

[MichaelEgan007]

[rjs]

This is a good example of how divorce lawyers (and family court judges) cause trouble because they're not familiar with the tax laws. It's not clear what being "entitled to" a percentage of her military retirement means. The decree apparently doesn't say anything about how you are going to get the money that you are "entitled to." As VolvoGirl said in the first reply above, it should have been set up as a QDRO. But it wasn't. Your ex is paying you herself and there is no QDRO. So I'm going to change my consultation recommendation again. If you don't want to treat it as alimony I think you need a good tax lawyer to straighten it out, or maybe a tax lawyer and a divorce lawyer working together. I don't know if it's possible to get a QDRO now, or if DFAS would honor it now. You might need to have the divorce decree revised.

If you end up with a QDRO you will get a Form 1099-R each year, and you will just enter the 1099-R in your tax return. If the conclusion is that it's alimony, you will enter it in your tax return as alimony received, which will be taxable income to you. Actually it's not clear to me why you think it's tax-free. Military retirement income is taxable. If you did have a QDRO it would be taxable income.

You said you've been getting these payments from your ex for over 10 years. How has it been shown on your tax return up to now? What form and line number is it on? Or have you just not been reporting it?

By the way, since you also included the child support section, I'll just point out that child support that you receive is not taxable income and you do not enter it anywhere in your tax return. (Another example of poor drafting of the decree, I think, is that it does not specify when the child support payments end. But that's not a tax issue.)

The bottom line is that the simplest solution is to enter the payments from your ex as alimony received, even if you don't think of it as alimony. If you do that, you don't need any lawyers, but you have to pay tax on the income. If you don't want to enter it as alimony, we can't help you here. You will need in-person professional help.

[MichaelEgan007]

Definitely a mess. The child support ended long ago,  my son turned 18 in 2019. 

As for coming to the conclusion that the military retirement portion is tax free, an irs agent assisted me in doing my taxes at the irs building in Florida, where I lived at the time (2005). She used the divorce decree when filing my taxes and she said it was not only tax free but it didn't need to be reported at all because my ex wife paid the taxes on that money that was court ordered to be disbursed to me. 

This was 20 years ago and after I left Florida, I continued filing my taxes as she instructed me until 2020 when I became permanently disabled and unable to fill them out myself. I've had a tax preparer in my area filling them out since 2021, also using the divorce decree. 

I can not afford a tax attorney at this point in my life so I really don't know what to do. The irs told me that it was tax free income and I've been unable to reach anyone at the irs office by me nor at the irs.gov phone number and I am now homebound so I can't try to visit them. 

I'm completely scrambled and confused by all of this now. 

[TomD8]

@MichaelEgan007 --

Why not apply to DFAS to have your share of your former spouse's military retirement paid directly to you?  It seems like that would greatly simplify things for both you and your former spouse.  It would certainly clarify your tax situation.

You apply by filing DD Form DD2293.  Here's a link to the form and its instructions:

https://www.esd.whs.mil/Portals/54/Documents/DD/forms/dd/dd2293.pdf

You'll find more detailed instructions here:

https://www.dfas.mil/garnishment/usfspa/apply/

[MichaelEgan007]

I have in fact, attempted this on several occasions over the years and it requires my ex to sign the document, which she has refused to do on each occasion. Dfas can not and will not process this without her signature and I am homebound disabled and living on not much more than this income. I can not afford an attorney, nor can I attent any sort of court cases in person. This income is actually now causing me problems with medicaid and I'm not in a position to handle any of this myself and I no longer have anyone who can help me.