Which of the following is an example of taxable alimony?

Question

A cash or check payment made under a decree of divorce or separation. The marriage settlement agreement was signed before December 31, 2018.
Child support payments.
A property transfer made within one year of a divorce.
Voluntary payments made outside of an agreement or a court decree of divorce or separation.

Answer 1

The correct answer is: A cash or check payment made under a decree of divorce or separation. The marriage settlement agreement was signed before December 31, 2018.

Under the tax laws that were in effect prior to 2019, alimony payments were considered taxable income for the recipient and deductible for the payor. However, for divorce agreements executed after December 31, 2018, alimony is no longer taxable or deductible.

Answer 2

Hosea and Jocelyn are divorced. Their divorce settlement agreement signed on July 1, 2017, states Hosea must pay Jocelyn $2,000 per month for child support and $1,000 per month for alimony.

Jocelyn's child support payments are:
Considered alimony.
Fully taxable.
Nontaxable.
Partially taxable.

Answer 3

Jocelyn's child support payments are: Nontaxable.

Child support payments are not considered taxable income for the recipient (Jocelyn in this case) and are not deductible for the payor (Hosea). In contrast, the alimony payments of $1,000 per month are taxable to Jocelyn and deductible for Hosea, given that their divorce settlement agreement was signed before the tax law changes effective January 1, 2019.

Answer 4

Peter and Kay are married and will file a joint return. Peter was unemployed for six months during 2023. They brought in the following tax documents to Jacob to prepare their return:
Peter's Form W-2 reporting wages of $22,400.
Kay's Form W-2 reporting wages of $55,300.
Peter's Form 1099-G reporting unemployment compensation of $5,200.
How much of this income is taxable and must be reported on their federal return?
$22,400
$55,300
$77,700
$82,900

Answer 5

To calculate the taxable income that Peter and Kay must report on their federal return, you need to sum up the income reported on their Forms W-2 and the unemployment compensation reported on Form 1099-G:

1. Peter's wages (Form W-2): $22,400
2. Kay's wages (Form W-2): $55,300
3. Peter's unemployment compensation (Form 1099-G): $5,200

Now, add these amounts together:

• Total Income = Peter's wages + Kay's wages + Unemployment compensation
• Total Income = $22,400 + $55,300 + $5,200
• Total Income = $82,900

Thus, the total amount of income that must be reported on their federal return is $82,900.

Answer 6

Caleb and his wife were legally divorced in 2021. After the divorce, Caleb retained physical custody of their son. Caleb received the following amounts from his ex-wife, on behalf of their son or as ordered by the court through a divorce decree:
Court-ordered child support of $1,000 per month.
Court-ordered alimony of $500 per month.
How much of this income is taxable and must be reported on his federal return?

Answer 7

In this situation, the tax implications are as follows:

1. Child Support: The $1,000 per month in court-ordered child support is not taxable income for Caleb. Child support payments are not considered taxable income for the recipient.

2. Alimony: The $500 per month in court-ordered alimony is considered taxable income for Caleb. Since Caleb was divorced in 2021, the alimony payments he receives must be reported as taxable income on his federal return.

Now let's calculate:

• Total Child Support: $1,000 x 12 months = $12,000 (not taxable)
• Total Alimony: $500 x 12 months = $6,000 (taxable)

Therefore, the only amount that Caleb must report as taxable income on his federal return is $6,000 (the alimony received).