rated:
posted: Jan. 9, 2008 @ 4:53p
SecondCor521 said:Two questions:
1. Married couple divorces in 2006. Husband pays alimony to ex-wife in 2007. Husband reports alimony paid on his 2007 1040 form and lists ex-wife's correct SSN. If ex-wife does not list this same alimony as income on her 2007 tax return, will the IRS hassle the husband at all, or just the ex-wife?
2. Single taxpayer files his 2006 return in early 2007 and pays the balance owing with his federal return. He files amended federal and state 2007 returns a few months later and as a result receives a state income tax refund. Taxpayer took the itemized deduction on his returns during this entire period (2006, 2007, 2008). Is it correct that taxpayer can deduct the additional amount paid with the original 2006 federal return on his 2007 federal schedule A? Is it correct that the taxpayer should include the taxable portion of the state income tax refund received in 2007 -- as indicated by the amount shown on the 1099-G he expects to receive -- as income on his 2007 federal 1040?
Thanks for the help!
1. Their primary attention will be focused on the ex-wife. However, if she makes some sort of claim like "he never sent me any money" then it is conceivable that they would also investigate the ex-husband's claims.
2. I may not be correctly understanding "Is it correct that taxpayer can deduct the additional amount paid with the original 2006 federal return on his 2007 federal schedule A?" It sounds like you are asking whether the taxpayer can claim a federal deduction for paying additional federal income taxes. There is never a federal income tax deduction for federal income tax payments, even if they are made with an amended return.
If the taxpayer took a deduction for state income taxes in a previous year and part of those taxes are refunded, they are taxable income in the year in which they were refunded to the extent the taxpayer received a net tax benefit in the previous year. Part of the refund may not be taxable if, for example, the taxpayer would have been better off taking the standard deduction for 2006 or the sales tax deduction for 2006 if it hadn't been for the refunded portion.
It also gets more complicated if some of the 2006 state taxes were paid in 2007. For example, if you made a 2006 estimated tax payment in 2007 or you made a payment when you filed your 2006 return. The refund is considered to be partly a refund of taxes paid in 2006 and taxes paid in 2007. Only a pro-rated portion would be considered a return of taxes deducted in 2006.
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