Someone is not telling the Internal Revenue Service the truth about their alimony.
When people pay alimony to ex-spouses, they can deduct these payments from their income and thus reduce their tax burden. Your ex-spouses will then need to claim the alimony payments as income when they file their federal tax return.
But almost half the time the numbers don’t match.
More than 560,000 taxpayers said they paid a total of $ 10 billion in alimony in 2010, the IRS inspector general said in a report released Thursday. Their spouses and ex-spouses said they received less than $ 8 billion, which equates to a $ 2.3 billion gap.
The report found discrepancies in 47 percent of the reports in which the alimony allowance was claimed. In many cases, the spouse who allegedly received the maintenance did not report any. In other cases, they told the IRS that they got less than their ex-spouses claimed to have paid.
The report does not make any judgment as to which side is most responsible for the discrepancies – the debtors or the dependents.
Still, Inspector General J. Russell George says the IRS should do more to resolve the discrepancies. Aside from examining a small number of tax returns, the IRS generally has no procedures in place to fill the compliance loophole, the report said.
The IRS says it is improving computer filters to catch the discrepancies. But, the agency said, progress has been slowed due to budget cuts.
“Since 2010, the IRS budget has been cut by nearly $ 850 million,” said an IRS statement. “At the same time, we now have 10,000 fewer employees than in 2010, although our area of responsibility has continued to expand.”