A recent report has revealed numerous discrepancies in the tax filings of divorced spouses who are paying or receiving alimony. The Tax Administration’s Treasury Inspector General claims that ex-spouses who are paying alimony are not reporting the same as ex-spouses who are receiving alimony in many cases. The IRS will now be scrutinizing tax filings that involve alimony in Florida and the rest of the nation in order to identify discrepant tax forms.
When it comes to IRS tax return filings, those who are paying alimony have the right to deduct those payments from their total income. Conversely, those who receive the alimony payments must report the income on their own tax return.
In 2010, approximately 570,000 tax returns noted included deductions for alimony payments. The deductions totaled approximately $10 billion. However, about 47 percent of these deductions did not match the alimony income reported by the corresponding alimony recipient. Other errors found involved the inclusion of the alimony recipient’s social security number. When an alimony payer fails to include a tax identification number for the alimony recipient, it could result in fees as much as $50 for the alimony payer.
Those who have recently gone through a Florida divorce involving alimony may want to double check their alimony incomes and/or alimony payments before reporting them on IRS tax forms. Indeed, a mistake in this regard could inspire an audit from the IRS, especially given the fact that the federal government is now looking more closely at filings with an alimony component. A consultation with one’s divorce attorney, CPA or financial advisor could help identify any mistakes so that they can be reported immediately.