Q I received a notice from the IRS that I’m being audited. Apparently, despite the fact that we changed our agreement in 2020, my ex-husband continued to deduct his alimony from his tax return, and now the IRS wants to know why I didn’t claim my alimony. To make matters worse, it looks like he’s started charging my health insurance premiums and claiming that those are also alimony payments.
Is there an easy way to fix this? Now that my alimony is half what it used to be, money for legal fees is tight.
A The first thing you need to do is go back and read your amendment agreement carefully again.
If, as part of the negotiations in your amendment agreement, you chose to change the tax status of your maintenance from taxable to non-taxable, your amendment agreement would have to specifically say that you are choosing non-tax status for the alimony payments going forward. Otherwise, it will continue to exist as taxable income for you. If you discover the non-taxable option in your amendment agreement, simply write back to the IRS and include the notice they sent you along with a copy of your amendment agreement. I recommend highlighting the applicable language that selects non-taxation. This should prompt the IRS to turn their attention to your ex.
As for health insurance premiums, if the contract doesn’t specify that his upfront payment of your health insurance premiums isn’t taxable as alimony, it can be argued that he can deduct the premiums on his tax return as alimony for you. Even if your new contract doesn’t make alimony tax-free, the fact that he never deducted his health insurance premiums as alimony suggests it wasn’t intended as alimony. This might be the hook you need to bring the tax issue up in another amendment in court. Show the judge what your net after-tax income is now, and ask for an increase in child support back to a level that meets your needs.
Email questions to firstname.lastname@example.org