Lump Sum Alimony

Question: when you make a lump sum payment in alimony is it taxable?

Answer: I've included links to explaining for you the taxability or deductibility of alimony payments

Question: if you owed 20000 dollars in alimony would you offer a lump sum of 18000 from your 401k? it has a 8 percent interest rate

Answer: It depends on the plan rules. It may be a good idea from the standpoint that most 401k loans are setup to pay you the interest. Most plans that I have seen though limit your contributions until the loan is repaid. If the plan allows you to take a loan out on it, you might as well....8 percent paid to you is better than 8 percent paid to the bank.

Question: Do you pay taxes on lump sum received from ex husband for his retirement? My fiance received a large lump sum, in the form of a cashiers check, from her ex husband after he retired. Is that taxable income? taxable gift? She says since it was in the divorce decree that she receives a certain percentage of his retirement that it would be considered alimony. Since he always pays in cash or check, where would she place the income on the tax files if no tax forms are ever sent out to her, ie: 1044 etc.

Answer: can't be a qdro...that would have to have been enforced prior to the distribution. And the distribution would have to be made directly to her from the trust. As for alimony? Totally depends on what the divorce decree states as per future payments and the payment of that retirement. This is really up to an attorney who would need access to the divorce decree. But I would guess if the document says something along the lines of she is to recieve $600/mth for life then it's a taxable gift. But if it says $600/mth for life PLUS a portion of ex's retirement then it can be considered alimony. But that's just an opinion that has no legal standing or support.

Question: Are father’s who have paid there ex wife a lump sum of money and in exchange? Are father’s who have paid there ex wife a lump sum of money and in exchange he will get sole custody of his daughter? The amount that he will have to pay for that will be more that the amount he would have to pay in child support and alimony to his ex wife if she were to have sole custody of her.

Answer: Michael Jackson

Question: What are the laws regarding alimony collection? My husband's child support case was closed 3 years ago with our state. Now, Ohio, this year reopened the case due to spousal support arrearages. At first they went directly to the employer and submitted the original case amount, as if he still owed child support. We got that straightened out, received another court order with no lump sum payment. This month, he is getting his bonus and well, this agency went into his employment to find this out and got an emergency court order to receive this bonus. Ohio does not use the interstate laws of collection. They submit the order to the others state of residence, without warning, and attach the pay. Not only have they placed a withholding on the bonus, the complete order calls for 100% statutory net collection. We have been paying the weekly requested amount. We need an attorney in Springfield, OH!

Answer: You should contact the local bar association in Springfield. If you can't find the bar association there, try the Ohio Bar Association in Columbus.

Question: If you are ordered to pay alimony monthly? If you are ordered to pay alimony monthly ( Georgia )..and the judge doesnt specify 1st of the month for example..could I pay her by the week instead?..its just to hard for me to come up with the money all in one lump sum..could she file an order against me?..she lives in one state and me in another..I couldnt affor to go back if she took me to court

Answer: As long as you are paying in advance of the due date. That said if you are under 30 days behind I doubt any judge would do anything about it.

Question: Does it make sense to sue for child support? I live in FL, my ex lives on the other side of the USA, and she and I agreed on a lump sum alimony two years ago when we divorced. (I am the primary custodial parent) that basically gave her credit for a lump sum child support as well. She is making more money now and never contributes in any other way, ie buying some clothes now and then, sending the kids money...ect and I think she should have more responsibility. She walked out of our home, but I dont feel she walked away from her financial responsibility. I know many women may not agree with me,,but I want to do the right thing for my/our two boys. They deserve it. But, does it make sense financially to do this with her living 2000 miles from us? And for what will amount to a few hundred dollars a month.

Answer: Doing what is right for the kids is what makes sense to me.

Question: How much alimony is enough? Husband and wife married five years. Wife never worked. Wife now wants 1200 a month, plus car until an indefinite period or until she is back on her feet. What would be a fair settlement. I've tried a lump sum of 20K with the paid car, but wife said no. No kids or other assets. Husband's income 100K/year. Married overseas and current Virginia residents.

Answer: Uh, any alimony in that case is too much! You have no kids - what the heck was she doing for 5 years? At the very most, absolute very most, I could see alimony for a period of time equal to 1/2 the marriage.....or 2.5 years in your case. $1200 a month plus car is ridiculous though! Haul her into court - let the judge make a determination. Without children though she will have a tough time proving that the five years she didn't work was necessary and not by choice.

Question: Divorce and taxes, is it really alimony? In our divorce decree my ex rec'd all rental properties (6) and I kept our main home. Because the combined rental assets were higher than the home asset he was to pay me a total of 60K. He paid the first 30 out over 18 mos then sold a rental and paid me the remaining 30K in a lump sum. How does this affect my taxes?

Answer: If its considered alimony then it is deducted on the payers return and included on your income. 1. Dollars. Do make payments in cash or by check to or for the benefit of a spouse or former spouse. 2. Documents. Do make payments in accordance with a divorce document, such as a marital settlement agreement, separation agreement, court order, or divorce judgment. Payments made pursuant to a temporary order or order pendente lite also qualify under Section 71 of the Internal Revenue Code. 3. Designation. Do include a statement in the divorce document labeling the payments as deductible by the payor and taxable to the recipient. Spouses sometimes intentionally make such payments nondeductible and nontaxable if they have not had a chance to analyze the tax consequences. 4. Distance. Do live apart. Payments must be made after a physical separation. 5. Death. Do terminate payments on the death of the recipient and include that condition in the divorce document. Most payors also have the right to terminate alimony on the recipient's remarriage or upon the death of the payor. 6. Dependents. Do maintain a clear division between alimony and child-related events. If you terminate alimony upon the emancipation of a child, you run the risk of the IRS reclassifying past alimony as nondeductible child support. Your past alimony deductions would be disallowed, and back taxes would then be owed. 7. Declining. Do follow IRS rules against front-loading. Alimony should not be excessively high or front-loaded in the first three post-separation years. Excessive payments are subject to recapture or being taxed to the payor in the third post-separation year.

Question: Do I have to pay taxes on my divorce settlment? I was divorced in December of 2008. I live in Utah. I did not recieve any alimony and we have no children. I did recieve a small payment from my ex husband. We owned a house and I did not want it so he paid me a lump sum of money instead. Do I pay taxes on that? Someone told me that I only pay taxes if I got alimony. I'm a little confused.

Answer: You have no taxes to pay in the divorce settlement. Transfers of property between a husband and wife in connection with separation or divorce are not income to the receiving spouse. Richard K Enrolled Agent This advice is based upon my understanding of the tax law in effect at the time is was written as it applies to the facts provided by you. See my profile for more information.

Question: Ladies, if you were getting alimony payments of $450.00/month, would you cash out? Here are the details:? I owe my ex $17, 550.00 alimony to be paid out at the rate of $450.00 per month. I proposed to offer her $10,000.00 cash to be paid now in one lump sum. In lieu of the $7550.00 she would forgo, I offered her a term life insurance policy on me for $25,000.00 payable upon my death. She is 51 and I am 51 next month. If you were my ex wife, would you accept this offer? Thank you in advance for your input! Have a lovely night! Alan

Answer: I would, because the quicker you pay me off the quicker I wouldn't have to deal with you. I don't know what's wrong with that chick. Have a nice night!!

Question: me and my ex-husband signed an MDA.He is not paying me my alimony. Help!? We signed an MDA, which said he owed me $12k a year for 3 years.He paid the first year.He is now 11 months late on his second 12K, and owes another 12K in less than 30 days. I took him to court, the judge told me, and he admitted he did owe me the money, but the judge only said I needed to put a levy on him.So i filed a levy on his bank account, but sometimes it takes 2 to 3 weeks to get the sheriff's to serve it.So today I get a MOTION TO PAY DEBT IN INSTALLMENTS. from my ex.He is asking the court's to only make him pay $250 a month until his 2nd alimony debt is paid off, Then In a month, I will have to file another levy to collect my last payment of alimony.I am out of work, go to college full-time, top of my class, getting married in May...$250 a month does not pay my rent, or a wedding.i don't think he knows about the levy I filed yet. How do I get my money in a lump sum, so I have money to live on, and pay for a very inexpensive wedding and honeymoon. The judge did charge my ex with a 10% penalty for every month until it is paid off, but I need to pay my rent. A measly $250 plus 25% interest is not going to do that. What should I do?

Answer: get legal advice, get a lawyer, good luck!

Question: How will I ever trust a woman again? I never lied while we were dating, no mask of my identity. A guy who made alot of money, enjoyed kids, movies, restaurants, and had a rather positive outlook on life. I was not a travel guy to Europe, nor did I enjoy going out every weekend to clubs. My wife was a exotically beautiful woman that would literally stop cars on streets in awe. We married almost 3 years ago. I loved my wife. I became attached to her two children and parents. especially the 12 year old daughter who will forever be in my heart. I tried hard to make my wife happy. I indulged her demands with expensive jewelry, bought a rather large 7,000 sq ft home to house my now family. Watched the kids, went to there ball games, drove them to school. Paid for their camp, parties, clothing, housing, expenses since the ex was a near dead beat dad. Her father developed terminal cancer and I drove him daily to drs and paid for medical expenses. And I got, screaming, demands, cheating, and now alimony & a lump sum paymen

Answer: Ouch. It sounds like you are aware of the fact that you are a descent person, and that you were a great husband, father, and son in law. It sounds like she is the one with issues. It won't be easy, but don't allow her to change the way you see the world, keep being the person you are and don't be afraid to put your trust back into the world and other people, life is too short to live any other way.

Question: Friend going through divorce... fair agreement? I have a male friend who is going through a divorce right now. He and his wife were going to use the same lawyer, but after a few rifts, she decided to get her on. She agreed on a lump sum of $60,000, alimony/child support of $1,800 a month, and the house to settle out of court. He seems to think this is fair and doesn't want to take it to court. What do you all think? Should he fight it? Details: -State of South Carolina -She earns around $30,000 a year -He averages $95,000 a year -She will have primary custody of the one child By the way--if he has asked ME for my advice, it would make it my business. Thanks.

Answer: He should think very hard about the future. I would not want to agree to alimony. Child support lasts until the children are grown. Alimony can be forever! She works, why should she get alimony? He should consider more money for the CS or agree to some college education costs.The home has to be settled at the same time. My husband gave away the home in his first marriage which he thought was the right thing to do for his children. Big Mistake! She told out HE lines on it and probably will not be able to afford to stay there when CS stops so the kids will wind up with nothing. Had he kept his name on it, she could not have done that.

Question: Heather Mills 53 million payout, your thoughts? You would know now that Heather has received compensation from the judge of 53 million pounds. My question is this, why is the payout figure commensurate with the wealth of the spouse? I mean, if it was me that she left, there would be alimony, maybe a lump sum settlement figure, etc, based on the needs of the divorcee (her, in tihs instance) and I can assure you t wouldn't be 53 million. The judge makes a decision based on his assumption of her ongoing needs, why does this figure seem to be related to "his" wealth? I don't want to hear from vigilant feminists; obviously he can afford it, but preferably women who don't agree with the verdict. Why is the settlement figure based on the financial standing of the wealthiest partner and not the needs of the other? That seems so very wrong to me. Again, of course he can afford it, but why should it be based on his wealth and not her needs, you can’t tell me she contributed to his wealth in any way and nor does she have needs (including her daughter’s that require 53 million) ???

Answer: I feel sorry for Paul's first wife, I wish to God that Paul never got married, Heather is a gold digger, and I do not believe she should have gotton 53 Million!!!! It is so sad, for a woman to take advantage of a man who has played such a vital role in this nations musical history, and then take him for all he has. Paul's children never liked him, so why did he not listen to his children??? But what is said is said and what is done is done, and I hope that Paul does go on with his life, and thinks twice about the "next one", hopefully, there will not be anymore.

Question: Should we start paying people to stay married? We penalize people in the US for divorcing. But, we penalized only the men. They have to pay child support, alimony, and other lump sums attached to the family courts and basically lose financial health. If they are independently wealthy it will not have much affect, but the majority are not wealthy. This financial hardship is lasting and changes the livelihood of all, the parents and the children for decades to come. It in many respects is a great social affect, and is basically a door to poverty and prevents upward mobility to another class level. If we start making laws that have the opposite affect do you think it will be better? And can you give some examples that might work?

Answer: I think they should stick it to the women. Take 3/4 of their things when divroced. Thats better.

Question: i am divorced and i want to know if i can claim my kids who i have soul custody of? i am a divorced mom of 3 kids. i do not work but i get alimony & child support weekly in one lump sum by check from my ex for the amount that is stated in our divorce papers. i know i have to file taxes on my alimony but since i have not worked this year can i still claim my children? or do i have to get a job before the year is over to claim them?my ex has not lived with us since dec of 2008 and is stated in the divorce that he hasn't. i feel i should b entitled to claim them since i have been the soul caretaker but what is my legal rights to?

Answer: Hi, ok I can't tell you for sure as I don't know what other income you might have or how your expenses get paid. But here is just about everything you need to know based on the info you provided where it relates to Divorce/Dependents/Taxes: First of all before you can even proceed I am assuming that you qualify for Head of Household filing status. You have to provide more than 50% of their care and they have to be in your care more than 50% of the time. Now we know that they are in your care so that part is taken care of. (FYI - Outside of Tax Law: even if he had them 50% of the time if your divorce decree says that you have full custody you are responsible to keep a home for them 100% of the time whether or not they are physically with you. This being the case you are legally entitled to keep 100% of the Child Support as you are legally bound to maintain a permanent home for them "though I disagree with this, it is the law, but I personally would adjust the child support accordingly"). The next part is whether or not you provide 50% of their expenses. You have to match (and hopefully exceed even by $1) the child support payments for their support. Your alimony is YOUR income and hopefully you have other income as well. (FYI Though you have to claim your alimony on your taxes your child support is not taxable). Also, you need to look at the expenses and split it 4 ways, 3/4 for your kids and 1/4 for you when it comes to rent/mortgage, utilities, food, etc. (Remember to include clothing expense, gifts, entertainment, insurance and copays, school trips and supplies, etc as these are often the expenses we forget but put you over the top). If your child support covers the kids part of the expenses completely then you wouldn't really be able to claim them. The quickest way to determine if you have a chance at claiming them is to determine if you have more income than what he is paying in child support. Generally if the support exceeds the income you don't really have a chance. If you have more income then he pays in child support then you have to do the expense breakdown for the 50% rule. Also, you don't mention whether or not you receive any type of welfare or support from other individuals. If the State or anyone else is supporting your children then the income they supply also plays a role. If you are receiving State assistance it is unlikely that you can qualify to claim your children. There are other rules as well regarding if it is mentioned in the divorce decree where it could even specify such details as swapping years or a cart blanche to one party to take the dependents in lieu of something else. See Publication 504 section called: Divorce decree or separation agreement made after 1984, where you can claim the kids if your spouse gives you permission to or signs a waiver to claim them on IRS Form 8322, Release of Claim to Exemption. You don't have to have it spelled out in your divorce decree, if you are able to come to an agreement outside of the court you can still use the form to show the IRS that your spouse has waived the right. The only issue with that is trusting your spouse to sign it next year if you give him the first year. One way to lock that in might be to let him claim one while you claim the other two every year even if you are working, this way you both get the benefit when you need it most and will be secure in knowing what will happen year to year as well as being able to simultaneously swap the forms as you will each have to give permission to the other. You might also appeal to his sense of responsibility reminding him that you need this money to bring up the kids. Also, if your only income is child support and alimony I ask that you have some mercy for the man as he is single handedly financially supporting two households. Anyway, if the expenses are completely equal generally the custodial parent will get the deduction as it is assumed that there are hidden expenses you are covering. If you both of you claim the children there is what they call the Tie-Breaker Rule which in this case you are supposed to win as they lived with you longer during the tax year in question. Though it is common to see pro forma Dissolution of Marriages that are uniform by State, your divorce is personal and can be very unique to you even if you filed it pro forma . My first pro forma divorce was modified to allowed me to change my first name as one example and also required my ex to carry life insurance and assign me as beneficiary until my children reach the age of 18, so you see your divorce is as unique as your marriage was and the only way to be sure what it says is to read it. Don't go by generalities about your divorce based upon your location, what someone else's divorce says or assume what your divorce decree says. Read it carefully as they differ not only between the States but often between Counties due to different judges, (some judges have "pet" issues where they are notorious for allowing some things and disallowing others), not to mention what his lawyer or your lawyer may have asked for and been granted. The truth is many things contribute to the modification of a pro forma divorce but when you introduce children to the divorce equation the pro forma goes out the window as child support, visitation, education and insurance, just to name a few, will be unique to you. If you able to take your children as dependents then there are several Tax Credits you should be aware of as well. There is an Earned Income Credit that applies against earned income, which Alimony is not defined as earned income so you wouldn't be entitled to that unless you have other income that is earned. There is a Child Care Credit which relates to your day care expenses that I doubt you qualify for as I am assuming you are a stay at home Mom. Then there is a Child Tax Credit that is part of the Economic Stimulus package where you get credit for just having children if you qualify under the rules. You may qualify for the Child Tax Credit as it applies against your tax due, namely against the income tax on your alimony. If you don't qualify for that because your income is so low that you have no tax due you may then qualify for the Additional Child Tax Credit which allows you to carry forward the credit you would have gotten this year to the next year when you might have tax to apply it against. If you are eligible for this credit I would take it just in case you are working next year. I see the laws have changed for this 2009 tax season so I have attached a link to those changes, though I don't think any of it applies to you, I am basing all this information only on the information you provided. Missing information can easily change what I am telling you here. If you are having a real tax problem you can call your Taxpayer Advocate in Taxpayer Service at your local IRS office and they can usually help you out there free of charge. Look here to find yours: http://www.irs.gov/advocate/article/0,,i… The IRS Taxpayer Service office is also open during tax season for walk-in’s should you have any tax questions and are often very helpful just be sure to bring in all your documentation so they have all the facts. The IRS went through a lot of bunk with their collections departments and made great strides to become "a kinder, gentler IRS". Taxpayer Service is there to help clarify the incredibly voluminous tax code for the average Joe Shmoe. (No it doesn't get recorded so that you are more easily audited and if it was it would more likely exempt you from audit as the IRS themselves have helped you). Look at it this way, who is better to represent you to the IRS? A Lawyer, CPA or other Agent or the IRS themselves? It’s a no brainer really as the IRS can't fight itself! There are several programs that are little known by the public that the IRS has to help you prepare your tax returns and usually for free. There is the Taxpayer Service walkin area I mentioned before; TCE and VITA Programs that are usually are disbursed within the community, (TCE I believe is geared specifically for the elderly); and another great program is the IRS's Free File! This not only prepares your return for you but electronically files it and can usually even accommodate State Returns. See my links below for all these programs. Psst. I use free file and love it myself as it often finds deductions that I wouldn't have found myself! All you do is answer the questions and it fills out your return for you! PS. Getting a job before the end of the year would only help if you are close to being able to claim them by only a few hundred dollars. Having a job in and of itself is not likely to guarantee you the ability to claim your kids this year though it could impact next year hugely if you work all through 2010. It may however provide you with the Credits that are only available for earned income, your wages may qualify you if all other qualifications are met.

Question: Unemployed Divorce Question? My brother is currently going through a divorce in Pennsylvania. While in the process, he has been fired from his employer. His wife is still trying to get monthly alimony of $2000.00 and she wants a lump sum of $10,000.00 up front. Is she still able to recieve this much if he is unemployed? She claimed she has benn planning to divorce him for quite some time. Aday after she moved out, divorce papers came to his house. They have been married for 7 years and they have a 5 year old son together. What is also the law on child support for unemployed parent? She also is not working and is getting assistance from the government. She is living with her mother currently but would like to attain a home on her own. The have a house that they brought together. He is living in it now.

Answer: Nope. You can't pay when you have no income. Support and alimony are calculated with a formula and it's based on his income ($0), her income, and how many years they have been married.

Question: Mystery Riddle: Who done it? Detective Larson gazed around the cluttered dingy apartment. The aging famous columnist Max Worthington had been fatally stabbed. His agent, Roger, had called the police when Max failed to submit his column to the newspaper. Max's body was draped over his manual typewriter. The detective glanced at the paper in the typewriter. It appeared to be the writer's column. The victim's head rested on the keyboard and had apparently hit random keys causing the last line of the article to be followed by "49t34 w5qgg3e j3". The detective was surprised to see that Max had used a typewriter rather than a computer. Roger, Max's agent, explained that Max found it therapeutic to pound the keys on his typewriter, and despised computers. Out of a list of acquaintances provided by Max's agent, the detective questioned the following people. Marisa had been separated from Max for the last year and a half. Although initially the split had been amicable, lately things had gotten nasty about the latest division of their assets. Max was willing to give Marisa the mansion and a generous lump sum payment, but wanted to draw the line at the excessive alimony being demanded by Marisa's lawyer. Marisa was living in the mansion and had a generous pre-alimony settlement and an extremely attractive new boyfriend. Jillian was Max's current girlfriend. She definitely was a looker and by all appearances was extremely high maintenance. She was also the spring in this May/December romance. Although crying, she was devastatingly attractive in her designer dress. She had a Gucci bag, wore emerald and diamond jewelry and on her wrist a new Rolex. The detective suspected her grief was for the loss of her "gravy train" and not for the deceased. Max's brother, Gerald, had been dating Marisa when Max had stolen her away. Gerald still held a grudge and blatantly told the detective that "he was glad his brother was dead and good riddance". He hinted that he might try to win Marisa back, now that his brother was dead. After a brief investigation an arrest was made. Who did the detective arrest? explain how you got the answer

Answer: The agent Roger stabbed him....the clue '49t34 w5qgg3e j3' means roger Stabbed me.....Max's hands were on the wrong keys, and he typed the letters higher than the ones he wanted

Question: Two lawyers tell me that???should i give in?? I am 26 yrs old and my hubby is 40 have been married 5.5 yrs now getting a divorce.I have two kids from prior relationship.I signed a pre-nup the day before we got married it was handed to me by his lawyer i signed it without reading it or understanding i thought it only prevented alimony.I have spoken to two lawyers and both told me the same thing that it would be hard to fight the pre-nup and would take a long time well beyond my current financial means.Even though my hubby cheated on me they say i would have a hard time proving it in court.The pre-nup states that i can keep any gifts from the marriage or personal belonging and am entiltled to a small lump sum of money.Should i just take what i can get and not fight it? I have not worked in 5.5 yrs and am running out of money.

Answer: The purpose of a pre-nup is to define terms in the event a marriage ends. Unless the document is invalid in some way, you'll have about the same odds of breaking it as you do any other legal contract. I'm afraid it is what it is.