Post # 1
I didn’t want to post this under my weddingbee account. I have a tax question.
In 2010 I purchased a home while engaged to my ex-husband. The home was only in my name and I was the only one on the deed.
At the end of 2011 we seperated. We wrote up a seperation agreement that was noterized that stated that neither of us would pay spousal support. It was stated that my ex-husband would remain living by himself (because he wanted to) (I moved back in with my parents and eventually somewhere else) in the home so long as he paid the mortgage (under my account, online) and took care of the utilities. After the divorce was finalized he would try to assume my mortgage (he wanted to) and at that point he would own the home.
He paid all of the payments and everything went great. In July of 2012 we were divorced. The decree stated neither of us would pay alimony but that I was to now deed the house to him after he assumed my mortgage. We went though the entire process and he was able to assume my mortgage and I deeded the home to him in October. Everything was fine.
Then tax time comes and I get my 1098 for the interest accrued on my mortgage from Jan to Oct. My ex husband states that he wants to claim this interest on his taxes because he paid the mortgage. I called the mortgage company and they stated that he couldnt because I was the sole owner, it was tied to my social security number. He got angry and stated that I was to give him the portion of my return that I got from claiming this interest. He said that was HIS money. I said no that I would not do that. That he lived in my home and essentially paid me rent to live there.
He said he would take me to court and I said fine. So he emails me yesterday and states that he was going to claim the mortgage payments from Jan to Oct as ALIMONY on his tax refund and that I HAD to put it down as alimony receieved…
I will not be putting it down as alimony recieved since:
1. It was not court ordered
2. I never recieved the money
3. He was paying for HIS living expenses, not mine.
I wanted to ask if I am correct in my thinking? If he does in fact have any validity to what he is trying to do?
I assume if he claims that money as alimony and I don’t claim it as alimony recieved (income) we will get audited. And I want to make sure I wont be the one screwed with penalties and fees.
I appreciate all who just read that. Haha! Thanks in advance! All input and advice is welcome.
Post # 3
Anybody? Pretty please! It is driving me crazy wondering what is going to happen.
Post # 4
I am not a CPA or a lawyer, so can say nothing about the legality, but if I were in your position, I would give him whatever extra refund I got based on the taxes. The idea is, you’re getting back a small portion of the taxes you paid, but you didn’t pay those taxes. He did. He can’t claim it because of how the paperwork is set up, but he DID pay those taxes. Right?
Post # 5
Was the house acquired during your marriage or before? Is your state a 50/50 no fault state?
There was no agreement spoken about how to handle his contributions to the house payment/taxes in the decree?
I don’t think he has any validity in that he can claim alimony expenses or all the interest! The 1098 is not even in his name; I don’t think someone else can claim them.
Maybe reimburse him the value of the taxes he paid for those months? Or give him cash for half the year’s taxes? Call it good and done. That’s probably of more value than trying to claim all the taxes for his tax return. HOw does even one caluclate the refund if you used taxes as itemizations? It’s like 27 cents to the dollar?
I don’t think he can call this alimony either!
If you used a laywers for the divorce, then I’d consult them too. Normally how to do the taxes gets spelled out in the decree – well it did for us. It said exactly how we were to file and all that.
Post # 6
Hi! I am a CPA, but I have only been practicing for 2 years (I’m 25 years old) and have not dealt with many divorce issues yet so I will try my best to help. I have 2 questions:
1. Did your divorce/separation instrument specifically state that these payments were not deductible as alimony?
2. Do you and your former spouse usualy take the standard deduction (5,950 in 2012) or itemize your deductions on schedule A?
Post # 7
Okay, actually I just came across something that might help determine the tax treatment of your situation. Unfortunately, unless these mortgage payments were speciifically designated as not being alimony in the divorce decree – I don’t think it was the answer you were looking for. I found the following 2 paragraphs on page 13 of IRS Publication 504, Divorced or Separated Individuals:
Payments to a third party. Cash payments, checks, or money orders to a third party on behalf of your spouse un- der the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. These include payments for your spouse’s medical expenses, housing costs (rent, utilities, etc.), taxes, tuition, etc. The payments are treated as received by your spouse and then paid to the third party.
Example 2. Under your separation agreement, you must pay the real estate taxes, mortgage payments, and insurance premiums on a home owned by your spouse. If they otherwise qualify, you can deduct the payments as alimony on your return, and your spouse must report them as alimony received. If itemizing deductions, your spouse can deduct the real estate taxes and, if the home is a qualified home, also include the interest on the mortgage in figuring deductible interest. However, if you owned the home, see the example under Payments not alimony, earlier. If you owned the home jointly with your spouse, see Table 4.
I’m really sorry – I was hoping my research would result in an answer that was beneficial to you and not him! I would recommend you read http://www.irs.gov/pub/irs-pdf/p504.pdf and http://www.irs.gov/publications/p936/index.html .
If you are not currently using a CPA to prepare your taxes, the IRS does have a hotline 1-800-829-1040 that you can call. However, if you do decide to call I would prepare to be on hold for quite some time – because they are usually slow over there. I don’t usually have much to contribute on these boards, but I enjoy reading others posts. I thought I would chime in on this one since its what I do. Please let me know if there is anything else I could possibly help with.
Post # 8
- Wedding: March 2016 - Mexico
I think IndyCPA is right. Unless your divorce decree specifically states that the mortgage payments your ex would be making on your property were not to be treated as alimony, it appears that they do meet the alimony criteria that IndyCPA referenced.
Post # 9
To answers a few of the questions:
The house was purchased while we were engaged. I live in sc.
the seperation agreement was not court ordered however it was notarized. It stated there was no spousal support. it did state that he was to pay the mortgage as he was living in the residence and I was not. The divorce decree stated not alimony and that I was is imply to transfer the property to him.
He takes itemized deductions
i was under the impression the a publication you referenced was only if he was paying my living expenses. Not paying for his own?
thank you all for your input!!
Post # 10
There are certainly quite a few variables in your situation which could affect the tax treatment of the mortgage interest paid. Without actually seeing the divorce decree (or knowing more about divorce law), I afraid I cannot give a definitive answer. You do have a couple of options here though. Let him claim the mortgage interest payments as alimony on his return while you either claim the same amount as alimony income and deduct the mortgage interest on your Schedule A or do not report them and run the risk of being audited (you may not actually be audited, but probably would receive a notice from the IRS). You could also seek the legal advice of your divorce attorney to get some clarification or have your return prepared by a CPA this year. Since he seems like he is being a jerk – I personally wouldn’t want him to get any benefit from the payments if possible and would probably spend the money to seek professional advice in order to try my best to make sure he wouldn’t get a dime- but that is just me haha. Another option would be for you to just let him deduct the interest on his Schedule A as long as he agrees not to report it as alimony payments and be done with it. If you choose to do this, I would not take the deduction on your schedule A. If you decide to let him take the Sch. A deduction, then the audit/risk of receiving a notice would fall solely on him. The good news is that you will not have to deal with any of this next year! I hope you figure everything out!
Post # 11
@IndyCPA: I don’t understand how the guy is being a jerk. He only started playing hardball, with the alimony thing, after she made it clear that she wasn’t going to do the right thing on her own. He PAID the interest, so why shouldn’t he get the tax benefit? That’s all he asked for, and the OP’s response was: “I said no that I would not do that. That he lived in my home and essentially paid me rent to live there.” So… is she claiming that rent as income? I’m guessing not. I don’t think that’s right. I understand that he can’t legally claim it, but there’s nothing stopping her from standing up and saying “he paid it, so it should go back to him.” We had a similar situation with some dependents that we had custody of for 9 months of a year. We were the ones who could legally claim them, but we willingly gave the other party 25% of the credit we received for them since they had cared for them the other 3 months. It seems wrong to me to keep the benefit when you did not lay out the cost.
Post # 12
I actually had it down as rental income until he mentioned alimony….
Anywho… You’re telling me that if you rented a home from someone and paid RENT… Aka their mortgage… Just some stranger… You go to them at the end of the year and ask for the portion of interest back? Same with an apartment complex?
Might I add that I gave him this home out right after purchasing on my own (down payment out of my pocket) in college. Trust me, he has gotten enough from me. Including all of the furniture I left inside. I get your point in just saying “okay he did pay it” but I bet if you knew the background of our divorce you’d say he’s gotten enough.
Everyone has a right to their opinion though.
ETA: I didn’t say he couldn’t claim it, the IRS did. It was SOLEY in my name therefore he can’t put it on his taxes. It’s tied to my social.
Also ETA: I guess I also felt the interest should have been of no concern to him considering he was simply paying for a roof over his head. I in no way made him stay there. It was his decision. And actually I wanted to remain at the home but since he also got the dogs, he needed the backyard. So I moved out and played nice guy. Idk I just feel like when you look at renting any place, the interest the owner accrues should not be the renters concern. I feel like he, and many others, are looking at it different soley because he is my ex husband. Had I said some random person was requesting this, I’m sure you would all think they had lost their mind.