Former spouse receives "her marital share" of military retirement and state pension

[Educated but confused]

The final decree incorporates the separation agreement with the statement: . Wife acknowledges her receipt of her share of Husband's VRS retirement shall be considered income to her and deductible from Husband's income. My question is how to properly do this?

[DaveF1006 · Accepted solution]

According to the IRS in Topic 452, Certain alimony or separate maintenance payments are deductible by the payer spouse, and the recipient spouse must include it in income (taxable alimony or separate maintenance).

For the recipient spouse, she will report this as follows in Turbo Tax.

1. Federal>wages and income>less common income>
2. Alimony received.

For the ex-husband;

1. Report this as federal>deductions and credits>
2. Other deductions and credits>alimony paid

[Critter-3]

Usually the military retirement is split when done thru a divorce  and the feds sends each person a payment of their own along with their own 1099-R ... if you have not yet set this up then do so asap. 

[Carl]

You need to make DFAS aware of this ASAP and provide them a copy of the court order. Then, DFAS will send her share directly to her, and she will receive her own 1099-R for reporting on her own tax return.

Log into your account at mypay.dfas.mil and on the left, select "court orders". Go from there to get information on the procedures you need to perform and follow.

[Educated but confused]

Thanks but we were not married long enough, while I was in the service, for the government to make direct payment nor does my branch of service fall under DFAS for retirement pay. For the state pension portion there is no “qualified domestic relations  order” so the state will not pay former spouse directly. I do pay by check monthly so there is the documentation she has received “her portion” of the retirement monies from both plans.

[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

Alimonies for divorces and separations finalized after 2018 are no longer taxable or deductible.

[Educated but confused]

Understood and hence the confusion this isn’t alimony. This is her portion of retirement/pensions, we are not able to have her paid directly by either plan due to plan requirements of one sort or another. I am meeting with an attorney soon for clarification also. There is very Specific wording in agreement and decree state neither is receiving alimony from the other. Basically it seems the only way to deduct it is through the use of the word/definition of the IRS forms/regulations/publications is to call it alimony for that purpose of deduction alone. 

[Carl]

The IRS has their rules, and like it or not we have to follow them. One issue is that whatever a divorce decree may say may not matter. The only authority that can over ride the IRS rules is a federal judge or congress. Since federal judges don't deal with divorce, separation or custody issues, I don't see that ever happening.  A lower court judge can "rule" whatever they want. But it holds no weight with the IRS.

Now when it comes to state taxes, that very well may be a different story. But with federal taxes, I've never known the IRS to "heed" to a lower court order. I'm not saying it hasn't happened. But I've never seen or heard of it.

I would suggest you question what I've stated above, with your legal advisor on this. The four most powerful words in your arsenal will be "show me in writing". I've never found, heard of or seen any IRS statute, publication or congressional law that requires the IRS to break their own rules in order to comply with the ruling of a lower court.

[Educated but confused]

Oh I completely agree on all points and I’ve been working for the “government” since late 70’s 😂 so I get your points.  I also don’t want to misrepresent or misfile anything not due. I understand the recent decisions about alimony per se, just unclear on how to report something that is clearly and specifically NOT alimony and in fact paid to another and not me. Hope that all makes sense, my reference to the local court was only to reflect she is NOT getting alimony rather a portion of a retirement plan she earned herself.