If my ex wife got 75 percent of the sale of our home and I got 25 percent, how do I claim that on my taxes?

[Rock85225]

If my ex-wife got 75 percent of the sale of our home and I got 25 percent, how do I claim that on my taxes?

[Vanessa A]

Did you get a 1099-S?  What you do will depend on if you did or not and who's name or names were on it.

If you did receive the 1099-S in just your name, then you would need to do a Nominee Return for the 75% that she received. You will basically need to issue your ex-wife a 1099-S for the income that was reported to you that she received that you did not receive.   To issue a 1099-S to your ex-wife you can do it directly through the IRS with this website.  but this is not part of your tax return.   You will then enter the 25% on your return. 

If you received one with both of your names on it, then you would just enter the 25% and she would enter the 75%.

If you did not receive a 1099-S, then you would just enter the amount you received from the sale.

To enter the Sale of a Home select the following:

• Federal
• Income
• Sale of Home under Less Common Income

[Rock85225]

So the 1099-S does just have my name on it. The gross proceeds show half the price of the sale price of the property ($199,750.00), which was $399, 500.00 but after all the fees and payoff for our old home were deducted it came out to a total of $143,003.56 profit to us. Out of that, I received 25% and my ex received 75%.

So I should deduct the fees, the payoff of my old house, and the extra percentage that my ex-wife received from $199,750.00?

[Vanessa A]

So it sounds like she received a 1099-S as well since yours is reporting half of the gross proceeds.  So you would need to issue the 1099-S for 25% or half of what you received.  

When you are entering your portion for the sale, you would only deduct 25% of the fees and the house payoff.  She would deduct the other 75% of the fees and payoff since she is getting 75% of the income.  This allows the deductions to match the income.

In the end, if you lived in the house for at least 2 out of the last 5 years, it is not going to be taxable income as it will fall under the home sale exclusion. 

1.  If you owned and lived in the home for 2 out of the last 5 years, then you may qualify for the home sale exclusion which would exclude up to $250k ($500k if married filing jointly) of the sale of your home.  In order to qualify you must not have used the home sale exclusion in the past 2 years. 
2. If you do not qualify, the rest of your income will play a part in the tax rate. This would be a capital gains sale so  your tax rate would be between 0% and 20%. The capital gains rates are as follows based on income
   • Zero percent rate for the following income
     • $44,625 for single or MFS
     • $59,750 for HOH
     • $89,250 for Married Filing Jointly
   • Fifteen percent for income more than above but less than below
     • $276,900 for MFS
     • $492,300 for Single
     • $523,050 for Head of Household
     • $553,850 for Married Filing Jointly
   • Twenty percent for the amount that your taxable income is over the 15% level. 

[Rock85225]

That is a little confusing. If I only deduct 25% of the fees it makes look as though I received more of the profit. I only received 25% out of the $143,003.56 from the sale of the house.

[DianeW777]

Check your information to see if you qualify for the home sale exclusion.  If so, you will not need to report the sale. If you do not qualify for the home sale exclusion follow the instructions next.

Here are the instructions for using nominee for your previous spouses' portion of the sale that was reported to you as explained by @VanessaA. You will report your 25% and the other spouse will report the 75%.

Nominee returns. 

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received).  You must also furnish a Form 1099 to each of the other owners. 

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

• On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer.  The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here: 

• Form 1096   (use the address for your area to mail to the IRS.
• Form 1099-S

@Rock85225 

[Rock85225]

I received a 1099S but the Gross proceeds amount shows $199,750.00 which is half of the sale price. They could have put the correct amount given to each of us (me 25% and my ex 75%) because they are the ones that divided the profit amount that way to each of us and not the way it is stated on the 1099S.

Anyway, since I got a 1099S, I guess I do have to claim it even though I qualify for the exemption because it is under $250,00 and we lived in the house for over 11 years, is that correct?

[Vanessa A]

 You can contact the issuer (if they paid her the 75% and you the 25% with 2 different checks) and ask them to send you a corrected 1099-S. 

Yes, you do have to claim it, but it is not going to be taxable income. 

[Rock85225]

I am going to do that. If I do this I will not have to go through the different IRS forms that you mentioned, correct?

[DawnC]

Correct.   If you get a corrected 1099-S, you can just enter the form in TurboTax and there will be no tax applied.