Tax deduction for lump sum alimony payment

[nice786]

I paid my exwife a lump sum amount towards all my alimony obligations. Our divorce decree specifies monthly alimony payments over three years with no mention of what the amount would be in case of a lump sum payment. The lump sum payment was made from my half of the proceeds obtained from selling our jointly owned home and has nothing to do with the property settlement. I did not write her a separate check for the lump sum alimony amount. We split the proceeds from the sale of the house into half and added the lump sump alimony amount to come up with the amount disbursed to her and I from the sale of the house. I have a written signed note from my exwife stating that the specified amount is the final payment towards all alimony obligations stated in our divorce decree. Can I deduct the lump sum alimony amount I paid her?

 

[irish223]

I think you'll need to consult a tax professional. There may be a problem since you didn't follow the terms of the decree. There will also be a huge problem for your ex since she will have to declare the pay-out as income.

One other possible problem is that your ex may be able to file for contempt of the decree because you won't be making monthly payments. The signed note may or may not hold up in court. I think you should also consult your attorney.

 

[nice786]

Thanks!

Regardless of what I do, isn't she legally required to report the lump sum payment as income anyway?

 

[irish223]

She could report it as a gift, both to the IRS and to the court.

I hope you trust her.