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Amended Tax Return

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Amended Tax Return

Amended tax return 18. Amended tax return   Alimony Table of Contents IntroductionSpouse or former spouse. Amended tax return Divorce or separation instrument. Amended tax return Useful Items - You may want to see: General RulesMortgage payments. Amended tax return Taxes and insurance. Amended tax return Other payments to a third party. Amended tax return Instruments Executed After 1984Payments to a third party. Amended tax return Exception. Amended tax return Substitute payments. Amended tax return Specifically designated as child support. Amended tax return Contingency relating to your child. Amended tax return Clearly associated with a contingency. Amended tax return How To Deduct Alimony Paid How To Report Alimony Received Recapture Rule Introduction This chapter discusses the rules that apply if you pay or receive alimony. Amended tax return It covers the following topics. Amended tax return What payments are alimony. Amended tax return What payments are not alimony, such as child support. Amended tax return How to deduct alimony you paid. Amended tax return How to report alimony you received as income. Amended tax return Whether you must recapture the tax benefits of alimony. Amended tax return Recapture means adding back in your income all or part of a deduction you took in a prior year. Amended tax return Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. Amended tax return It does not include voluntary payments that are not made under a divorce or separation instrument. Amended tax return Alimony is deductible by the payer and must be included in the spouse's or former spouse's income. Amended tax return Although this chapter is generally written for the payer of the alimony, the recipient can use the information to determine whether an amount received is alimony. Amended tax return To be alimony, a payment must meet certain requirements. Amended tax return Different requirements generally apply to payments under instruments executed after 1984 and to payments under instruments executed before 1985. Amended tax return This chapter discusses the rules for payments under instruments executed after 1984. Amended tax return If you need the rules for payments under pre-1985 instruments, get and keep a copy of the 2004 version of Publication 504. Amended tax return That was the last year the information on pre-1985 instruments was included in Publication 504. Amended tax return Use Table 18-1 in this chapter as a guide to determine whether certain payments are considered alimony. Amended tax return Definitions. Amended tax return   The following definitions apply throughout this chapter. Amended tax return Spouse or former spouse. Amended tax return   Unless otherwise stated, the term “spouse” includes former spouse. Amended tax return Divorce or separation instrument. Amended tax return   The term “divorce or separation instrument” means: A decree of divorce or separate maintenance or a written instrument incident to that decree, A written separation agreement, or A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. Amended tax return This includes a temporary decree, an interlocutory (not final) decree, and a decree of alimony pendente lite (while awaiting action on the final decree or agreement). Amended tax return Useful Items - You may want to see: Publication 504 Divorced or Separated Individuals General Rules The following rules apply to alimony regardless of when the divorce or separation instrument was executed. Amended tax return Payments not alimony. Amended tax return   Not all payments under a divorce or separation instrument are alimony. Amended tax return Alimony does not include: Child support, Noncash property settlements, Payments that are your spouse's part of community income, as explained under Community Property in Publication 504, Payments to keep up the payer's property, or Use of the payer's property. Amended tax return Payments to a third party. Amended tax return   Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. Amended tax return These include payments for your spouse's medical expenses, housing costs (rent, utilities, etc. Amended tax return ), taxes, tuition, etc. Amended tax return The payments are treated as received by your spouse and then paid to the third party. Amended tax return Life insurance premiums. Amended tax return   Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy. Amended tax return Payments for jointly-owned home. Amended tax return   If your divorce or separation instrument states that you must pay expenses for a home owned by you and your spouse, some of your payments may be alimony. Amended tax return Mortgage payments. Amended tax return   If you must pay all the mortgage payments (principal and interest) on a jointly-owned home, and they otherwise qualify as alimony, you can deduct one-half of the total payments as alimony. Amended tax return If you itemize deductions and the home is a qualified home, you can claim one-half of the interest in figuring your deductible interest. Amended tax return Your spouse must report one-half of the payments as alimony received. Amended tax return If your spouse itemizes deductions and the home is a qualified home, he or she can claim one-half of the interest on the mortgage in figuring deductible interest. Amended tax return Taxes and insurance. Amended tax return   If you must pay all the real estate taxes or insurance on a home held as tenants in common, you can deduct one-half of these payments as alimony. Amended tax return Your spouse must report one-half of these payments as alimony received. Amended tax return If you and your spouse itemize deductions, you can each claim one-half of the real estate taxes and none of the home insurance. Amended tax return    If your home is held as tenants by the entirety or joint tenants, none of your payments for taxes or insurance are alimony. Amended tax return But if you itemize deductions, you can claim all of the real estate taxes and none of the home insurance. Amended tax return Other payments to a third party. Amended tax return   If you made other third-party payments, see Publication 504 to see whether any part of the payments qualifies as alimony. Amended tax return Instruments Executed After 1984 The following rules for alimony apply to payments under divorce or separation instruments executed after 1984. Amended tax return Exception for instruments executed before 1985. Amended tax return   There are two situations where the rules for instruments executed after 1984 apply to instruments executed before 1985. Amended tax return A divorce or separation instrument executed before 1985 and then modified after 1984 to specify that the after-1984 rules will apply. Amended tax return A temporary divorce or separation instrument executed before 1985 and incorporated into, or adopted by, a final decree executed after 1984 that: Changes the amount or period of payment, or Adds or deletes any contingency or condition. Amended tax return   For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, get the 2004 version of Publication 504 at www. Amended tax return irs. Amended tax return gov/pub504. Amended tax return Example 1. Amended tax return In November 1984, you and your former spouse executed a written separation agreement. Amended tax return In February 1985, a decree of divorce was substituted for the written separation agreement. Amended tax return The decree of divorce did not change the terms for the alimony you pay your former spouse. Amended tax return The decree of divorce is treated as executed before 1985. Amended tax return Alimony payments under this decree are not subject to the rules for payments under instruments executed after 1984. Amended tax return Example 2. Amended tax return Assume the same facts as in Example 1 except that the decree of divorce changed the amount of the alimony. Amended tax return In this example, the decree of divorce is not treated as executed before 1985. Amended tax return The alimony payments are subject to the rules for payments under instruments executed after 1984. Amended tax return Alimony requirements. Amended tax return   A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met. Amended tax return The payment is in cash. Amended tax return The instrument does not designate the payment as not alimony. Amended tax return Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. Amended tax return There is no liability to make any payment (in cash or property) after the death of the recipient spouse. Amended tax return The payment is not treated as child support. Amended tax return Each of these requirements is discussed below. Amended tax return Cash payment requirement. Amended tax return   Only cash payments, including checks and money orders, qualify as alimony. Amended tax return The following do not qualify as alimony. Amended tax return Transfers of services or property (including a debt instrument of a third party or an annuity contract). Amended tax return Execution of a debt instrument by the payer. Amended tax return The use of the payer's property. Amended tax return Payments to a third party. Amended tax return   Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. Amended tax return See Payments to a third party under General Rules, earlier. Amended tax return   Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met. Amended tax return The payments are in lieu of payments of alimony directly to your spouse. Amended tax return The written request states that both spouses intend the payments to be treated as alimony. Amended tax return You receive the written request from your spouse before you file your return for the year you made the payments. Amended tax return Payments designated as not alimony. Amended tax return   You and your spouse can designate that otherwise qualifying payments are not alimony. Amended tax return You do this by including a provision in your divorce or separation instrument that states the payments are not deductible as alimony by you and are excludable from your spouse's income. Amended tax return For this purpose, any instrument (written statement) signed by both of you that makes this designation and that refers to a previous written separation agreement is treated as a written separation agreement (and therefore a divorce or separation instrument). Amended tax return If you are subject to temporary support orders, the designation must be made in the original or a later temporary support order. Amended tax return   Your spouse can exclude the payments from income only if he or she attaches a copy of the instrument designating them as not alimony to his or her return. Amended tax return The copy must be attached each year the designation applies. Amended tax return Spouses cannot be members of the same household. Amended tax return    Payments to your spouse while you are members of the same household are not alimony if you are legally separated under a decree of divorce or separate maintenance. Amended tax return A home you formerly shared is considered one household, even if you physically separate yourselves in the home. Amended tax return   You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment. Amended tax return Exception. Amended tax return   If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order may qualify as alimony even if you are members of the same household when the payment is made. Amended tax return Table 18-1. Amended tax return Alimony Requirements (Instruments Executed After 1984) Payments ARE alimony if all of the following are true: Payments are NOT alimony if any of the following are true: Payments are required by a divorce or separation instrument. Amended tax return Payments are not required by a divorce or separation instrument. Amended tax return Payer and recipient spouse do not file a joint return with each other. Amended tax return Payer and recipient spouse file a joint return with each other. Amended tax return Payment is in cash (including checks or money orders). Amended tax return Payment is: Not in cash, A noncash property settlement, Spouse's part of community income, or To keep up the payer's property. Amended tax return Payment is not designated in the instrument as not alimony. Amended tax return Payment is designated in the instrument as not alimony. Amended tax return Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household. Amended tax return Spouses legally separated under a decree of divorce or separate maintenance are members of the same household. Amended tax return Payments are not required after death of the recipient spouse. Amended tax return Payments are required after death of the recipient spouse. Amended tax return Payment is not treated as child support. Amended tax return Payment is treated as child support. Amended tax return These payments are deductible by the payer and includible in income by the recipient. Amended tax return These payments are neither deductible by the payer nor includible in income by the recipient. Amended tax return Liability for payments after death of recipient spouse. Amended tax return   If any part of payments you make must continue to be made for any period after your spouse's death, that part of your payments is not alimony, whether made before or after the death. Amended tax return If all of the payments would continue, then none of the payments made before or after the death are alimony. Amended tax return   The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law. Amended tax return Example. Amended tax return You must pay your former spouse $10,000 in cash each year for 10 years. Amended tax return Your divorce decree states that the payments will end upon your former spouse's death. Amended tax return You must also pay your former spouse or your former spouse's estate $20,000 in cash each year for 10 years. Amended tax return The death of your spouse would not terminate these payments under state law. Amended tax return The $10,000 annual payments may qualify as alimony. Amended tax return The $20,000 annual payments that do not end upon your former spouse's death are not alimony. Amended tax return Substitute payments. Amended tax return   If you must make any payments in cash or property after your spouse's death as a substitute for continuing otherwise qualifying payments before the death, the otherwise qualifying payments are not alimony. Amended tax return To the extent that your payments begin, accelerate, or increase because of the death of your spouse, otherwise qualifying payments you made may be treated as payments that were not alimony. Amended tax return Whether or not such payments will be treated as not alimony depends on all the facts and circumstances. Amended tax return Example 1. Amended tax return Under your divorce decree, you must pay your former spouse $30,000 annually. Amended tax return The payments will stop at the end of 6 years or upon your former spouse's death, if earlier. Amended tax return Your former spouse has custody of your minor children. Amended tax return The decree provides that if any child is still a minor at your spouse's death, you must pay $10,000 annually to a trust until the youngest child reaches the age of majority. Amended tax return The trust income and corpus (principal) are to be used for your children's benefit. Amended tax return These facts indicate that the payments to be made after your former spouse's death are a substitute for $10,000 of the $30,000 annual payments. Amended tax return Of each of the $30,000 annual payments, $10,000 is not alimony. Amended tax return Example 2. Amended tax return Under your divorce decree, you must pay your former spouse $30,000 annually. Amended tax return The payments will stop at the end of 15 years or upon your former spouse's death, if earlier. Amended tax return The decree provides that if your former spouse dies before the end of the 15-year period, you must pay the estate the difference between $450,000 ($30,000 × 15) and the total amount paid up to that time. Amended tax return For example, if your spouse dies at the end of the tenth year, you must pay the estate $150,000 ($450,000 − $300,000). Amended tax return These facts indicate that the lump-sum payment to be made after your former spouse's death is a substitute for the full amount of the $30,000 annual payments. Amended tax return None of the annual payments are alimony. Amended tax return The result would be the same if the payment required at death were to be discounted by an appropriate interest factor to account for the prepayment. Amended tax return Child support. Amended tax return   A payment that is specifically designated as child support or treated as specifically designated as child support under your divorce or separation instrument is not alimony. Amended tax return The amount of child support may vary over time. Amended tax return Child support payments are not deductible by the payer and are not taxable to the recipient. Amended tax return Specifically designated as child support. Amended tax return   A payment will be treated as specifically designated as child support to the extent that the payment is reduced either: On the happening of a contingency relating to your child, or At a time that can be clearly associated with the contingency. Amended tax return A payment may be treated as specifically designated as child support even if other separate payments are specifically designated as child support. Amended tax return Contingency relating to your child. Amended tax return   A contingency relates to your child if it depends on any event relating to that child. Amended tax return It does not matter whether the event is certain or likely to occur. Amended tax return Events relating to your child include the child's: Becoming employed, Dying, Leaving the household, Leaving school, Marrying, or Reaching a specified age or income level. Amended tax return Clearly associated with a contingency. Amended tax return   Payments that would otherwise qualify as alimony are presumed to be reduced at a time clearly associated with the happening of a contingency relating to your child only in the following situations. Amended tax return The payments are to be reduced not more than 6 months before or after the date the child will reach 18, 21, or local age of majority. Amended tax return The payments are to be reduced on two or more occasions that occur not more than 1 year before or after a different one of your children reaches a certain age from 18 to 24. Amended tax return This certain age must be the same for each child, but need not be a whole number of years. Amended tax return In all other situations, reductions in payments are not treated as clearly associated with the happening of a contingency relating to your child. Amended tax return   Either you or the IRS can overcome the presumption in the two situations above. Amended tax return This is done by showing that the time at which the payments are to be reduced was determined independently of any contingencies relating to your children. Amended tax return For example, if you can show that the period of alimony payments is customary in the local jurisdiction, such as a period equal to one-half of the duration of the marriage, you can overcome the presumption and may be able to treat the amount as alimony. Amended tax return How To Deduct Alimony Paid You can deduct alimony you paid, whether or not you itemize deductions on your return. Amended tax return You must file Form 1040. Amended tax return You cannot use Form 1040A or Form 1040EZ. Amended tax return Enter the amount of alimony you paid on Form 1040, line 31a. Amended tax return In the space provided on line 31b, enter your spouse's social security number (SSN) or individual taxpayer identification number (ITIN). Amended tax return If you paid alimony to more than one person, enter the SSN or ITIN of one of the recipients. Amended tax return Show the SSN or ITIN and amount paid to each other recipient on an attached statement. Amended tax return Enter your total payments on line 31a. Amended tax return You must provide your spouse's SSN or ITIN. Amended tax return If you do not, you may have to pay a $50 penalty and your deduction may be disallowed. Amended tax return For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Amended tax return How To Report Alimony Received Report alimony you received as income on Form 1040, line 11. Amended tax return You cannot use Form 1040A or Form 1040EZ. Amended tax return You must give the person who paid the alimony your SSN or ITIN. Amended tax return If you do not, you may have to pay a $50 penalty. Amended tax return Recapture Rule If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. Amended tax return If you are subject to this rule, you have to include in income in the third year part of the alimony payments you previously deducted. Amended tax return Your spouse can deduct in the third year part of the alimony payments he or she previously included in income. Amended tax return The 3-year period starts with the first calendar year you make a payment qualifying as alimony under a decree of divorce or separate maintenance or a written separation agreement. Amended tax return Do not include any time in which payments were being made under temporary support orders. Amended tax return The second and third years are the next 2 calendar years, whether or not payments are made during those years. Amended tax return The reasons for a reduction or end of alimony payments that can require a recapture include: A change in your divorce or separation instrument, A failure to make timely payments, A reduction in your ability to provide support, or A reduction in your spouse's support needs. Amended tax return When to apply the recapture rule. Amended tax return   You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year. Amended tax return   When you figure a decrease in alimony, do not include the following amounts. Amended tax return Payments made under a temporary support order. Amended tax return Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income from a business or property, or from compensation for employment or self-employment. Amended tax return Payments that decrease because of the death of either spouse or the remarriage of the spouse receiving the payments before the end of the third year. Amended tax return Figuring the recapture. Amended tax return   You can use Worksheet 1 in Publication 504 to figure recaptured alimony. Amended tax return Including the recapture in income. Amended tax return   If you must include a recapture amount in income, show it on Form 1040, line 11 (“Alimony received”). Amended tax return Cross out “received” and enter “recapture. Amended tax return ” On the dotted line next to the amount, enter your spouse's last name and SSN or ITIN. Amended tax return Deducting the recapture. Amended tax return   If you can deduct a recapture amount, show it on Form 1040, line 31a (“Alimony paid”). Amended tax return Cross out “paid” and enter “recapture. Amended tax return ” In the space provided, enter your spouse's SSN or ITIN. Amended tax return Prev  Up  Next   Home   More Online Publications
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Individual Shared Responsibility Provision – Calculating the Payment

 

The individual shared responsibility provision requires you and each member of your family to either have basic health insurance coverage (also known as minimum essential coverage), qualify for an exemption, or make an individual shared responsibility payment when you file your federal income tax return. It is important to remember that choosing to make the individual shared responsibility payment instead of purchasing minimum essential coverage means you will also have to pay the entire cost of all your medical care. You won't be protected from the kind of very high medical bills that can sometimes lead to bankruptcy.

If you must make an individual shared responsibility payment with your return, the annual payment amount is the greater of a percentage of your household income or a flat dollar amount, but is capped at the national average premium for a bronze level health plan available through the Marketplace. You will owe 1/12th of the annual payment for each month you or your dependent(s) don’t have either coverage or an exemption.

For 2014, the annual payment amount is:

  • The greater of:
    • 1 percent of your household income that is above the tax return filing threshold for your filing status, or
    • Your family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a family maximum of $285,
  • But capped at the cost of the national average premium for a bronze level health plan available through the Marketplace in 2014.

Calculating your payment requires you to know your household income and your tax return filing threshold.

  • Household income is the adjusted gross income from your tax return plus any excludible foreign earned income and tax-exempt interest you receive during the taxable year. Household income also includes the incomes of all of your dependents who are required to file tax returns.
  • Tax return filing threshold is the amount of gross income an individual of your age and with your filing status (e.g., single, married filing jointly, head of household) must make to be required to file a tax return.

2014 Federal Tax Filing Requirement Thresholds

Filing Status Age Must File a Return If Gross Income Exceeds
Single Under 65 $10,150
  65 or older $11,700
Head of Household Under 65 $13,050
  65 or older $14,600
Married Filing Jointly  Under 65 (both spouses) $20,300
  65 or older (one spouse) $21,500
  65 or older (both spouses) $22,700
Married Filing Separately  Any age $3,950
Qualifying Widow(er) with Dependent Children Under 65 $16,350
  65 or older $17,550

 

Examples

In the examples below, we assume that the payment amounts do not exceed the national average premium for bronze level coverage for the individuals involved. These examples are used only to represent the mechanics of calculating the payment and are not estimates of current or future health insurance premium costs. For information on the cost of bronze level plans, visit HealthCare.gov.

Example 1: Single individual with $40,000 income

Jim, an unmarried individual with no dependents, does not have minimum essential coverage for any month during 2014 and does not qualify for an exemption. For 2014, Jim’s household income is $40,000 and his filing threshold is $10,150.

  • To determine his payment using the income formula, subtract $10,150 (filing threshold) from $40,000 (2014 household income). The result is $29,850. One percent of $29,850 equals $298.50.
  • Jim’s flat dollar amount is $95.

Because $298.50 is greater than $95 (and is less than the national average premium for bronze level coverage for 2014), Jim’s shared responsibility payment for 2014 is $298.50, or $24.87 for each month he is uninsured (1/12 of $298.50 equals $24.87).

Jim will make his shared responsibility payment for the months he was uninsured when he files his 2014 income tax return, which is due in April 2015.

Example 2: Married couple with 2 children, $70,000 income

Eduardo and Julia are married and have two children under 18. They do not have minimum essential coverage for any family member for any month during 2014 and no one in the family qualifies for an exemption. For 2014, their household income is $70,000 and their filing threshold is $20,300.

  • To determine their payment using the income formula, subtract $20,300 (filing threshold) from $70,000 (2014 household income). The result is $49,700. One percent of $49,700 equals $497.
  • Eduardo and Julia’s flat dollar amount is $285, or $95 per adult and $47.50 per child. The total of $285 is the flat dollar amount in 2014.

Because $497 is greater than $285 (and is less than the national average premium for bronze level coverage for 2014), Eduardo and Julia’s shared responsibility payment is $497 for 2014, or $41.41 per month for each month the family is uninsured (1/12 of $497 equals $41.41).

Page Last Reviewed or Updated: 24-Mar-2014

The Amended Tax Return

Amended tax return Publication 523 - Additional Material Prev  Up  Next   Home   More Online Publications