IRS Reports Billions in Alimony Discrepancies

By Sheryl Rentz on June 18, 2014

When filing for taxes, you must inform the Internal Revenue Service (IRS) of the amount of money you paid or received in alimony. According to a news report in The Associated Press, there was about $10 billion in reported alimony payments made in 2010, but only $8 billion reported received by spouses. In fact, there was a $2.3 billion gap between what people said they paid and what people reported receiving. The IRS reports that there were discrepancies in 47 percent of the claims that included alimony deduction. Some spouses claimed to not have received any alimony while others reported far less than they actually received.

It is unclear how the IRS will respond to these findings. It is possible that they will conduct additional investigations to ensure that people are not lying on their tax returns. The report does not render judgment regarding which side is responsible for the discrepancies and the Treasury Inspector General for Tax Administration (TIGTA) reports that there is no system in place to address improper alimony claims.

TIGTA did not recommend for the IRS to examine more tax returns, but the audit did encourage the IRS to send out notices to claimants who sent in alimony information that did not match their ex-spouse’s income. This may be all that is needed. According to The Washington Free Beacon, 92 percent of individuals who had received notices changed their filing behavior in the subsequent tax year.

If you are receiving or paying alimony in Pennsylvania, it may be in your best interest to work with a tax professional. You want to make sure that you are reporting the right numbers or risk facing an audit. You also may want to consider discussing your situation with an alimony attorney.

Negotiating your alimony amount is one of the more stressful parts of getting a divorce. It is not any easier to request a change in the amount of alimony later or to file a lawsuit when someone is not paying the negotiated amount. If you are going through a divorce, it would be in your best interest to schedule a consultation with an experienced Pennsylvania divorce lawyer who will ensure that your rights are protected.