Q25 What are the exceptions to the recapture rule? Some tax considerations for people who are separating or divorcing Although his ex-wife does not have to recognize the value of the stock until she sells it, her tax basis in the stock is the same as her ex-husband's. Q7 May payments of cash to a third party on behalf of a spouse qualify as alimony or separate maintenance payments if the payments are made to the third party at the written request of the payee spouse? Involuntary SMA may be granted when an agency determines that adverse, dangerous, unhealthful living conditions, such as lack of medical facilities, warrant exclusion of your family from your post of assignment or when the agency determines that there is a need to exclude family members from accompanying an employee to the area. For purposes of determining whether alimony or separate maintenance payments are to be made in any year, the possible termination of such payments upon the happening of a contingency (other than the passage of time) which has not yet occurred is ignored (unless such contingency may cause all or a portion of the payment to be treated as a child support payment). Transitional SMA may be paidfor reasonsfollowing the termination of an evacuation (a) through (c)or in connection with commencement/termination of an unaccompanied tour of duty (d) and (e): (a) following termination of an evacuation and conversion of a post to an unaccompanied status; (b) following termination of an evacuation and reversion of post to accompanied status,to allow a child to complete the current academic term (i.e., semester, quarter); (c) following termination of an evacuation and reversion of post to accompanied status family members cannot return to post for reason(s) beyond the employee's control; (d) when family members must depart from an accompanied foreign post because the employee's next foreign post is unaccompanied; or. (1) Decree of divorce or separate maintenance. 19. The employee requested continuation of SMA because the employee has been ordered to pay separate maintenance to the spouse or domestic partner. Will my SMA payments terminate while they are at post? United States Code: Title 26,215. The rates for Involuntary and Voluntary SMA are at DSSR 267.1a. Voluntary SMAmay be authorized when there are special family needs or hardship prior to or after arrival at post for reasons including but not limited to career, health, educational or family considerations for the spouse, children, or other family members. Is monthly maintenance taxable? DSSR264.2b EXCEPTIONprovides the following guidance: following termination of an authorized/ordered departure an employee may elect voluntary SMA at the official safehaven for family members previously eligible for SEA payments under DSSR chapter 600 and for whom round-trip travel expenses have already been authorized. A is to make no payment in 1990. The excess amount with respect to 1985 that is recaptured in 1986 is $3,000 ($25,000 ($12,000 + $10,000)). . Also in calculating the subsistence expense portion of the HSTA, should the spouse or domestic partner be included in the calculation or does it apply only to the employee? The third exception is where the alimony or separate manitenance payments in any post-separation year cease by reason of the death of the payor or payee or the remarriage (as defined under applicable local law) of the payee before the close of the computation year. Q:Three months after an employee's spouse or domestic partner departed post under SMA orders, the employee informed post management that the spouse or domestic partner initiated separation/divorce/dissolution action shortly after returning to the U.S. Q6 May payments of cash to a third party on behalf of a spouse qualify as alimony or separate maintenance payments if the payments are pursuant to the terms of a divorce or separation instrument? No. Three months after an employee's spouse or domestic partner departed post under SMA orders, the employee informed post management that the spouse or domestic partner initiated separation/divorce/dissolution action shortly after returning to the U.S. Tax Treatment of Alimony and Separate Maintenance Amounts paid to a spouse or a former spouse under a divorce or separation instrument (including a divorce decree, a separate maintenance decree, or a written separation agreement) may be alimony or separate maintenance payments for federal tax purposes. Also, when a child travels on educational travel at the secondary level, they are not eligible for SMA for the 12-month period following that travel/trip (DSSR 263.6). Answer. PDF Conditions of Service for Overseas U.S. Direct Hire Employees - Peace Corps If you use the standard meal allowance, you must still keep records to prove the time, place, and business purpose of your travel. 14. Here the statuses separating or recently divorced people should consider: Married filing jointly. A25 Apart from the $10,000 threshold for application of the recapture rule, there are three exceptions to the recapture rule. The recapture rule would, however, apply for 1990. If a spouse has been making payments pursuant to a divorce or separation instrument described in section 71(b)(2) (A) or (B), a modification of the instrument or the substitution of a new instrument (for example, the substitution of a divorce decree for a written separation agreement) will not result in the creation of additional post-separation years. Q18 When will a payment be treated as to be reduced at a time which can clearly be associated with the happening of a contingency relating to a child of the payor? A12 No. How much tax do I pay on spousal support? Q: If an employee gets married or acquires a domestic partner while on R&R, his/her spouse or domestic partner is entitled to airfare from the "point of acquisition" back to post. Form 1099-MISC. Refunds and other payments made in connection with overpayments or erroneous payments of income tax and other taxes levied under title 26 of the United States . Q: I am receiving SMA for my child. If approved you will begin to receive payments in your bi-weekly salary check. Additionally: payments must be cash to the spouse or ex-spouse or to a third-party for the benefit thereof the parties reside in separate households separate tax returns are filed and the payer includes the Social Security number of the recipient Does this mean the employee is eligible to receivethe "with family" amount for themiscellaneous portion of the Home Service Transfer Allowance, or does the employee getthe "without family" amount? This is the sum of an $11,000 excess amount with respect to 1985 ($22,000$1,000 + $10,000)) and a $1,000 excess amount with respect to 1986 ($12,000($1,000 + $10,000)). Voluntary SMA may be authorized when there are special family needs or hardship prior to or after arrival at post for reasons including but not limited to career, health, educational or family considerations for the spouse, children, or other family members. Q4 Are the instruments described in section 71(a) of prior law the same as divorce or separation instruments described in section 71, as amended by the Tax Reform Act of 1984? If the amount of the payments decreases within 6 months of when a child reaches the age of majority, or the child gets married or dies, then the reduction amount is considered child support, which is nontaxable to the recipient and nondeductible to the payer. Assuming all other requirements are satisfied, a payment of cash by the payor spouse to a third party under the terms of the divorce or separation instrument will qualify as a payment of cash which is received on behalf of a spouse. 11. The Tax Reform Act of 1984 replaces the old requirements with the requirements described in A2 above. A-3 No. Does the regulation authorize the government to pay for the ticket? (c) In the case of spouses legally separated under a decree of divorce or separate maintenance, the spouses are not members of the same household at the time the payment is made (see A9). Q12 Will a divorce or separation instrument be treated as stating that there is no liability to make payments after the death of the payee spouse if the liability to make such payments terminates pursuant to applicable local law or oral agreement? See the Instructions for Forms 1099-MISC . U.S. Department of State | Home Page 18. 15. A payment may be treated as fixed as payable for the support of a child of the payor spouse even if other separate payments specifically are designated as payable for the support of a child of the payor spouse. There is no . Is separate maintenance allowance taxable? For purposes of this calculation, the amount of alimony or separate maintenance payments made by the payor spouse during any post-separation year preceding the computation year is reduced by any excess amount previously determined with respect to such year. What is Separate Maintenance Allowance (SMA)? If the divorce decree also required A to make a $1 payment in 1990, the minimum term rule would be satisfied and $20,000 would be treated as an alimony payment in each of the calendar years 1985 through 1989. The only allowances that can be taxable are: Choice Credits. The tax-free personal savings allowance should be increased as savings rates rise, according to a former government minister. Under the divorce decree, A is to make alimony payments to B of $2,000 per month. Q:The spouse or domestic partner of an employee is residing in the US. Is this proper? TSMA may last for up to 90 calendar days and the TSMA rates are at DSSR 267.1b. Agency for International Development (USAID) --See ADS 477 USDA--FAS -- Director, International Services StaffDepartment of Commerce--Director, Office of Foreign Service Human Resources. On a joint return, married people report their combined income and deduct their combined allowable expenses. A6 Yes. These facts indicate that A's liability to make annual $10,000 payments in trust for the benefit of his minor children upon the death of B is a substitute for $10,000 of the $30,000 annual payments to B. Alimony recapture rules apply when the 1st and 2nd year payments exceed $15,000, but the 3rd-year payment drops by more than $15,000. Q: Ok, I finally understand the SMA regulations. While the Office of Allowances is responsible for setting foreign per diem rates, per diem travel policy, both foreign and domestic, is governed by the Federal Travel Regulation (FTR) and not by the DSSR. Is this correct? This topic has been updated to transaction code (TC) 62 Sick Leave, to add the new prefix 70, PPL Biological Birth; 71, PPL Placement for Adoption; and 72, PPL Placement for Fostering. a decree of divorce or legal separation a decree of support; or a written separation agreement. My family is currently on SMA and is scheduled to visit post during the holiday period. Allowances for Transitions - United States Department of State This would be considered the employee's initial election point for voluntary SMA. When a child is on SMA, he/she is not eligible for educational travel. Reassignment Allowance. For example, in November 1984, A and B executed a written separation agreement. The presumption in the two situations described above that payments are to be reduced at a time clearly associated with the happening of a contingency relating to a child of the payor may be rebutted (either by the Service or by taxpayers) by showing that the time at which the payments are to be reduced was determined independently of any contingencies relating to the children of the payor. 1.71-1T Alimony and separate maintenance payments (temporary). The result would be the same if the lump sum payable at B's death were discounted by an appropriate interest factor to account for the prepayment. Can I pay my wife to avoid tax? Family members cannot reside in the same country or within 300 miles (one way road mileage) from the employee under V. Yes, however, employees should review agency regulations for limits. 21. Another common situation where the rules will not apply is when the payment is based on a contingency, such that the amount that will be paid will depend on the income generated in future years, such as by the payer's business. Q10 Assuming all other requirements relating to the qualification of certain payments as alimony or separate maintenance payments are met, what are the consequences if the payor spouse is required to continue to make the payments after the death of the payee spouse? There are three types of SMA: Involuntary, Voluntary and Transitional. As a follow up to the above question, I brought my dependent child to post on USG travel orders. Will my SMA payments terminate while they are at post? Under the terms of a divorce decree, A is obligated to make annual alimony payments to B of $30,000, terminating on the earlier of the expiration of 6 years or the death of B. " (a) General Rule.. If the days left in the semester are more than 90 days, then the remainder of the SMA days (following the 90 paid at the TSMA rate) are paid according to DSSR 264.2 (2) "Exception" and the "Voluntary SMA" rates at DSSR 267.1a. For example, if B dies at the end of the 10th year in which payments are made, A will pay to B's estate $150,000 ($450,000$300,000). Alimony and separate maintenance payments are no longer deductible by the spouse making the payments nor are they includable in the income of the spouse receiving the payments. U.S. Department of State | Home Page However, what if the newly acquired spouse or domestic partner returns to his/her original place of residence (where they go on SMA immediately). Such payments are to be reduced to $1,500 per month on January 1, 1991 and to $1,000 per month on January 1, 1995. Thus, for such taxable years, only $15,000 of the $20,000 received is includible under section 71 (a) (1) in the wife's income and is deductible by the husband under section 215. The first rule is a minimum term rule, which must be met in order for any annual payment, to the extent in excess of $10,000, to qualify as an alimony or separate maintenance payment (see A2(f)). What Is Separate Maintenance? - BahrieLaw The divorce decree provides that if B dies before the expiration of the 15 year period, A will pay to B's estate the difference between the total amount that A would have paid had B survived, minus the amount actually paid. Chapter 1 specifies that the Uniform Allowance payment is Pensionable but does not specify the Maintenance Allowance (Blazer) payment is pensionable.