Results 1 to 9 of 9
  1. #1

    Default Is a Delayed Payment from Divorce Payment Deductible as Alimony

    I was divorced about 8 yrs ago. In the agreement, I am to give my ex a large sum of money when my parent was to die, leaving me an inheritance. It will be paid by check in a lump sum. There is no mention of tax consequences, therefore I believe it meets all the qualifications to be deducted as alimony according to the rule of the IRS.. except maybe one. The IRS says that payments cannot be considered alimony if the obligation continues past the ex spouse's death.

    The agreement says I pay a lump sum to her within 30 days of my receiving it. That part of the agreement says nothing more.

    At the end of the entire agreement, is the following. Does this mean the obligation continues beyond her death making it not qualify as alimony for a federal tax deduction?

    "Estate Obligations" The Agreement shall bin the parties hereto, their heirs, executors, administrators, representatives and assigns and shall inure to the benefit of their respective heirs, executors, administrators, representatives and assigns."

    The payment meets all other requirements.

    Thanks

    MyKidsDad

  2. #2
    Join Date
    Oct 2014
    Posts
    7,457

    Default Re: Divorce Payment Deductible

    It would be important to read the entire agreement to be sure, but assuming that the language you quoted applies to all the provisions in the agreement it means that you are obligated to pay this sum of money to her estate or beneficiaries if she dies before payment is made. That in turn would disqualify it from being alimony because your obligation to pay it extends beyond her death. The idea behind the rule is that alimony is meant to provide support to ex-spouse to meet living needs. Once a person dies, they no longer need any support. The fact that you have to pay it even after death, therefore, indicates it is not support but rather it is a division of marital assets.

  3. #3
    Join Date
    Oct 2006
    Posts
    15,739

    Default Re: Divorce Payment Deductible

    Quote Quoting Taxing Matters
    View Post
    It would be important to read the entire agreement to be sure, but assuming that the language you quoted applies to all the provisions in the agreement it means that you are obligated to pay this sum of money to her estate or beneficiaries if she dies before payment is made. That in turn would disqualify it from being alimony because your obligation to pay it extends beyond her death. The idea behind the rule is that alimony is meant to provide support to ex-spouse to meet living needs. Once a person dies, they no longer need any support. The fact that you have to pay it even after death, therefore, indicates it is not support but rather it is a division of marital assets.
    I agree. I do not even see where the OP gets the idea that the payment meets any of the qualifications to be considered as alimony.

  4. #4
    Join Date
    Jun 2015
    Posts
    988

    Default Re: Divorce Payment Deductible

    You didn't ask about other options...but it might be simple to side step getting an inheritance at least as far as you worded things?

  5. #5
    Join Date
    Oct 2006
    Posts
    15,739

    Default Re: Divorce Payment Deductible

    Quote Quoting HRinDEVON
    View Post
    You didn't ask about other options...but it might be simple to side step getting an inheritance at least as far as you worded things?
    Are you REALLY going to suggest that the OP try to dishonor the court orders? That normally is not how we do things here.

  6. #6
    Join Date
    Jun 2015
    Posts
    988

    Default Re: Divorce Payment Deductible

    Absolutely NOT....the order is as the order is...and we don't know details ....but as posted it seems to require a payment upon receipt of an inheritance ...

  7. #7
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: Divorce Payment Deductible

    A typical court's response to being informed that a party to a divorce has deliberately given up an asset in order to avoid complying with the terms of the divorce judgment is to order that party to make up the difference out of his own pocket.

  8. #8
    Join Date
    Oct 2014
    Posts
    7,457

    Default Re: Divorce Payment Deductible

    Quote Quoting HRinDEVON
    View Post
    You didn't ask about other options...but it might be simple to side step getting an inheritance at least as far as you worded things?
    Doing a disclaimer here would be foolish for two reasons. First, as Mr. K points out, the court is likely to say he remains liable to pay the ex the sum she is owed whether he takes his inheritance or not. Second, he almost certainly is not giving her the entire inheritance he is receiving. Giving it all up just to avoid giving her part of it makes no sense. He’s still ahead of the game getting the inheritance and giving her the share she is due.

  9. #9

    Default Re: Divorce Payment Deductible

    Whoa! You are all getting off topic. I will be writing a check for the amount specified in the agreement. No problem here. My question was if I could take a tax deduction. The IRS says yes IF all conditions are met. The one in question is whether the obligation continues after her debt. I asked if the language I quoted meant that it did continue after her death. The answer was "yes," so it is not tax deductible.

    That was the only issue. I am writing a check for the full amount due her (tomorrow). I just won;t be taking a tax deduction.

    Thanks,

    MyKidsDad

    1. Sponsored Links
       

Similar Threads

  1. Spousal Support and Alimony: Show Cause Hearing on Non-Payment of Alimony
    By Jean Parker Vrahiotes in forum Divorce, Annulment and Separation
    Replies: 1
    Last Post: 02-26-2014, 07:46 AM
  2. Resignation: Delayed Payment of Wages : Breaking a Contract
    By targetisb in forum Employment and Labor
    Replies: 3
    Last Post: 05-07-2012, 06:49 PM
  3. Reinstatement: Vehicle Redemption Delayed Well After Payment
    By jumar667 in forum Cars and Dealerships
    Replies: 3
    Last Post: 11-21-2011, 11:44 AM
  4. Debt Collectors: Treatment Facility Negotiated Payment Rate, Billing for Remainder (Deductible)
    By TeeJay in forum Debts and Collections
    Replies: 2
    Last Post: 08-05-2011, 09:33 AM
  5. Spousal Support and Alimony: Non-Payment of Alimony
    By ciaobella123 in forum Divorce, Annulment and Separation
    Replies: 3
    Last Post: 09-23-2009, 08:35 AM
 
 
Sponsored Links

Legal Help, Information and Resources