Alimony Deduction Question

[Hooked38]

Hello all,

Situation - Divorce papers were signed by the Judge in April 2018 but the divorce date is in 2019.  I understand the IRS pubs as I (payer) can claim the deduction.  Ex is stating the effective divorce date is in 2019 so she doesn't have to claim the alimony.  Am I correct on being able to deduct the alimony?

After reading the IRS 2020 Instructions for the 1040, Schedule 1, Page 85.  

Line 2a

Enter amounts received as alimony or separate maintenance pursuant to a divorce or separation agreement entered into on or before December 31, 2018, unless that agreement was changed after December 31, 2018, to expressly provide that alimony received isn't included in your income. Alimony received is not included in your income if you entered into a divorce or separation agreement after December 31, 2018. If you are including alimony in your income, you must let the person who made the payments know your social security number. If you don’t, you may have to pay a penalty. For more details, see Pub. 504. If you are including alimony payments from more than one divorce or separation agreement in your income, enter the total of all alimony received on line 2a.

Line 2b

On line 2b, enter the month and year of your original divorce or separation agreement that relates to the alimony payment, if any, reported on line 2a. If you have alimony payments from more than one divorce or separation agreement, on line 2b enter the month and year of the divorce or separation agreement for which you received the most income. Attach a statement listing the month and year of the other agreements. 

[Opus 17]

The question is, when was the divorce executed? That’s the language used in the IRS regulations.

https://www.irs.gov/forms-pubs/clarification-changes-to-deduction-for-certain-alimony-payments-effec...

Two different legal websites indicate that the execution date is the date when the document is fully signed and notarized (if notary is required).   I am not an attorney, and if I were you, I would not rely on the advice of the Internet.  I suggest you ask your family law attorney when your divorce was executed.

(I am also quite puzzled as to why the divorce would not to be final until nine months after it was executed.  My ex-wife and I were separated for two years, but when we decided it really was over, the divorce was executed and effective as fast as we could get the judge to sign the papers.)

In any case, if you claim an alimony deduction and provide your spouse‘s Social Security number, and your ex-spouse does not claim corresponding income, the IRS will investigate both of you and make a final determination based on the documents and proof that you can show them.

[Mike9241]

ask your lawyer. technically the law says no deduction nor taxability if "EXECUTED" after 2018 or "EXECUTED" before 2019 and modified after that date. "executed" is a legal term 

you should find this link interesting

https://info.legalzoom.com/article/what-correct-date-divorce-date-filing-or-date-judgment-divorce 

if it's concluded that you are entitled to a deduction, take it. you can inform your ex of what you are doing.

if you take a deduction and she doesn't report it as income, the IRS will eventually send you both a notice asking for proof of your position. the loser gets a tax bill.

[Hooked38]

For 2020, I claimed the deduction and she didn't.  I guess we will be talking to a IRS person.  And....In the divorce paperwork, I am to claim the kids for taxes and she is directed to provide the release of dependant form 8332.  She didn't.  Back to court.

The delay was for her to have a benefit.

[Opus 17]

@Hooked38 

For alimony, you can claim it on your tax return regardless of her cooperation, and you will show your divorce instrument to the IRS when they ask questions.

For the child tax credit, you are correct that the IRS will not award the dependent to you on the basis of the divorce decree, and you must have a form 8332. If your ex won’t provide it, you have to go back to Family Court.

If I might make a suggestion, completely outside my training or professional expertise, I think it’s time for some unconventional thinking.  I would think about proposing to your ex and to the judge that your base alimony amount be reduced by 30% and make it non-taxable/non-deductible (since the modification would take affect after 2019).   The reduced amount would compensate for the tax effects. That way, your tax return is not entangled with your ex anymore.  In other words, cut the alimony amount and forget about the tax deduction.  I would also think about further modifying the alimony or child support award to reduce the annual amount rather than trading dependents.  Under current tax law, the child tax credit is $3000, but it reduces back to $2000 for 2022 and afterwards unless Congress passes a new increase. So the effect of claiming a child as a dependent will save most taxpayers about $2000 a year.  If you had for example, two children, you could simply modify the order to reduce your alimony or child support by $4000 every other year or by $2000 every year and then not try to claim the children as a dependent.  That way you get the same financial benefit but you are not subject to your ex‘s cooperation.

Changing tax laws should probably require changing approaches to divorce finances and custody issues. But this is just my uninformed opinion. Good luck.