ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Monday, March 17, 1997 TAG: 9703180092
SECTION: MONEY PAGE: 6 EDITION: METRO
COLUMN: TAX QUESTIONS
Q: My husband has been ordered in the final decree of his divorce from his ex-wife to pay her $150 per month alimony, $200 per month to the lessor for her rent, and $225 every six months to an insurance company for her auto coverage. This will end in February 1999.
Since this is written and signed by the judge, we are allowed to claim all of this as alimony deductions on our Form 1040 each year until 1999.
She is a 56-year-old who draws Social Security disability. We do not know the amount she draws.
Our question is, will she ever be taxed on the amount we claim as a deduction for alimony on our 1040 each year? If so, will we be notified of this or will she be the only one notified of the tax due?
A: When claiming a deduction for alimony, the taxpayer must include the recipient's Social Security number on line 29 with the amount paid or face a possible $50 fine.
The Internal Revenue Service attempts to match the Social Security number associated to your deduction with the person receiving the alimony payments. The person who receives the alimony (your husband's ex-wife) must report this amount on line 11 of form 1040. (Note that you cannot use form 1040A or 1040EZ to report alimony payments.)
If she is not reporting this income on her tax return, the Internal Revenue Service will notify her about the tax due plus possible interest and penalties. However, whether she owes any income tax depends on her other income and deductions, if any. The Internal Revenue Service will not notify you of any information filed in the return of your husband's ex-wife.
- Answered by Timothy Boitnott of Miller, Morgan, Agee & Clem
Q: I recently received a letter, addressed to me and my husband, from the Division of Child Support Enforcement (DCSE). In this letter, DCSE said they intended to take our joint tax refund to pay back child support. I have several questions related to this letter.
I understand that I can file an injured spouse claim to protect my portion of the refund from this state agency. Can this agency take my husband's portion of the refund even if the judge in the case said he can pay it back as an addition to the monthly child support, which he is doing? Does this agency have the power to go above and beyond our local judges?
Can you tell me what law allows DCSE to take my portion of the tax refund? Their letter clearly stated that they intended to take my portion as well as his, unless I filed as an injured spouse. It seems unfair that my husband's ex-wife should be entitled to money that I have earned and do not owe to her. This is especially upsetting me because his ex-wife has lost several jobs and does not take her employment situation seriously. When she winds up unemployed (due to absenteeism), then she expects him (and now me) to pick up the slack.
Now that I plan to file injured spouse, how will the IRS determine which portion of the joint refund is mine? Am I eligible to have my portion of the refund deposited directly into my account? I've heard there may be problems with this.
Thank you for helping me through this confusing legal and tax situation. I would think many others are not aware of the power this state agency wields, even to those who do not owe child support.
(I have not signed my name because of the stigma that could be placed against my husband as a "deadbeat dad." My husband loves his child very much and spends a great deal of time with him. The back child support accumulated during a period of legal negotiations after his ex-wife provided fraudulent medical information and sent DCSE after my husband for her illegitimate child. The true father of the second child was finally determined after a DNA test, yet my husband is now considered the deadbeat.)
A: Your questions concerning the Division of Child Support Enforcement's authority and abilities should be referred to your husband's attorney, since these items are case-specific.
Generally, state and federal agencies refer to the IRS names of taxpayers who are behind on certain obligations such as income taxes, student loans and child support. The IRS will withhold all or part of the taxpayer's refund to satisfy the debt, and remit it to the agency notifying the IRS of the deficiency.
When a joint return is filed and only one spouse is obligated to pay the past due amount, to be considered an Injured Spouse all of the following must occur: 1) You must file a joint return, 2) You are not required to pay the past-due amount, 3) You received and reported income (such as wages, interest income, etc.) on the joint return, 4) You made and reported tax payments (such as federal income tax withheld from wages or estimated tax payments) on the joint return, and 5) You have an overpayment on the joint return.
If you are an injured spouse, you can obtain your portion of the joint refund by completing Form 8379, Injured Spouse Claim and Allocation, and attaching it to your Federal Income Tax Return. If you have already filed your return, you may apply for the Injured Spouse's portion of the refund by filing Form 1040X, Amended Federal Income Tax Return and attaching Form 8379.
By completing and filing Form 8379, the IRS will figure the injured spouse's share of the joint refund. Form 8379 allocates all items on the joint return to each spouse. It is important to make sure all items on the joint return are reported and allocated on Form 8379. In addition, a schedule or statement should be attached to Form 8379 explaining how you allocated income and expenses that are joint in nature.
Due to the complexity of this type of return, it is generally better to file the return and receive a refund check, rather than having the refund directly deposited to your bank account.
-Answered by Joe Schaben of Miller, Morgan, Agee & Clem
LENGTH: Medium: 99 linesby CNB