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HoH question

I was a widower with twin sons age 2 when I remarried in

2003. My second wife was divorced with a son age 4. In May of 2007, I was promoted and transferred from Indianapolis to Atlanta. She refused to relocate and we legally separated. The property settlement has me paying $500 per month against the home equity loan on an addition made to her house to accommodate me and my sons and it gives me a 30% lien on the house less the balance of the addition. I pay directly to the bank. I have my sons. She has her son. We had no children together. I say we can both file as unmarried heads of household. I also say I can deduct the interest on the home equity loan payments. The first two tax pros I interviewed say we'll both get audited if we do that and that the loan payments should be classified as non-dedcutible alimony. Am I out to lunch or are they?

Jason

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Reply to
Jason
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I'll defer to someone who can examine all the paperwork to determine the treatment of your ongoing payments. Were I you I'd pick someone who knows that you can both file as HofH. I'm assuming here that you both meet the requirements for a marital status of either single or "considered unmarried" for tax purposes. See IRS Publication 501.

-- Phil Marti Clarksburg, MD

Reply to
Phil Marti

Them, at least mostly.

Based on the facts you presented both you and and your wife qualify for head of household filing status. It is less clear whether your house payments should be characterized as alimony. However, if the payments are alimony then they are deductible by you and reportable by your wife as income. As far as I know, there is no such thing as "non-deductible alimony." Regards, Bill

Reply to
Bill Brown

Actually, some alimony that was deducted in a prior year may have to be recaptured! I guess that would make the recaptured alimony non- deductible. Here is what IRS publication states,

Recapture of Alimony If your alimony payments decrease or terminate during the first 3 calendar years, you may be subject to the recapture rule. 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. Your spouse can deduct in the third year part of the alimony payments he or she previously included in income. Cheers,

WDK

Reply to
KEBSCHULLW

Guess again.

Reply to
Bill Brown

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