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Old 11-10-2016, 01:15 AM
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Question Taxes for 2015/2016 after divorce; OPM still has not divided pension

Hi! Divorce finalized in May 2015, x is retired federal employee receiving monthly pension, and papers have been sent to OPM by lawyer and signed for (three times so far) that divide the pension 50/50, but when x calls they claim they have not received those papers. So here we are 18 months on and still nothing from OPM.

In the meantime, x and I split the pension payments ourselves. At first, we divided whatever was deposited each month into the joint checking account that we must continue to keep until OPM gets its act together. Then I realized that the decree specified x was to provide for the kids' health insurance (and his child support was adjusted down to reflect this), so I believe I was paying half of their (and his) insurance for 8 months. At that point, we agreed that I would get half the net, plus half the amount paid for that health insurance since it was taken out before the net is deposited into the account. So we ballparked that and I've been getting what I think is the right amount now, more or less.

Now I'm getting nervous about how much tax I'm going to owe when OPM catches up with the court order and the IRS comes for their share of what I received but couldn't report as income, as x filed using the 1099R since it was in his name only. So, a couple of questions please:

1) Am I correct about the health insurance, that when OPM gets the job done the pension will be divided and the health insurance will be deducted from x's portion?

2) X has filed tax year 2015 and (will file) 2016 using the 1099R. I'm thinking that since we divided the net then I've sort of already "paid tax" on my portion and that x should probably help with any tax the IRS says I owe when OPM gets finished with us, since he claimed the taxes as his own and received a refund from it. Does this make sense? I know it's going to be a messy thing to sort out and returns will need to be amended, just want to know if I should be able to expect x's help or not.

I'll be the first to admit math is not my strong point. X states he does not understand what I'm talking about, so I need some outside help to tell me if I'm on the right track or not.

Thanks in advance!

T



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Old 11-10-2016, 09:31 PM
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In the meantime, x and I split the pension payments ourselves. At first, we divided whatever was deposited each month into the joint checking account that we must continue to keep until OPM gets its act together. Then I realized that the decree specified x was to provide for the kids' health insurance (and his child support was adjusted down to reflect this), so I believe I was paying half of their (and his) insurance for 8 months. At that point, we agreed that I would get half the net, plus half the amount paid for that health insurance since it was taken out before the net is deposited into the account. So we ballparked that and I've been getting what I think is the right amount now, more or less.

Now I'm getting nervous about how much tax I'm going to owe when OPM catches up with the court order and the IRS comes for their share of what I received but couldn't report as income, as x filed using the 1099R since it was in his name only. So, a couple of questions please:============>> If you divorce while working for the US government, your former spouse may be entitled to a portion of your retirement benefits. ThOPM handles the administration of federal retirement benefits. Once you and your former spouse have agreed to a split of your retirement assets in court, the OPM's court order unit will review your case and calculate the amount due to each of you.ALSO, Your former spouse's retirement payouts do not start until you are eligible to begin receiving your benefits. If you choose to remain working past retirement age, your spouse will become eligible for payouts on the day you reached retirement age


1) Am I correct about the health insurance, that when OPM gets the job done the pension will be divided and the health insurance will be deducted from x's portion?==========> it depends; you may also be able to remain enrolled in the Federal Employee Health Benefits Program.So,aslongas you paid for the kids? also as your dependents. You can include medical expenses you paid for your dependent(s). For you to include these expenses, the person(s) must have been your dependent(s) either at the time the medical services were provided or at the time you paid the expenses. If not then,no.So I think that you need to check whether or nor the kids? were also your dependents, if yes then, yes you claim you can claim your payments from X?s portion; X cannot keep a former spouse, you on X?s health insurance after divorce even if x still must provide family plan insurance for x?s dependents/ minor children. the money x paid out of x?s own pocket for the premiums might be tax deductible; Also note, x can not deduct health insurance unless x itemizes tax deductions on sch a of 1040. However, to actually claim a deduction on X?s return, total qualified expenses, including eligible health insurance premiums, must exceed 10% of AGI.

2) X has filed tax year 2015 and (will file) 2016 using the 1099R. I'm thinking that since we divided the net then I've sort of already "paid tax" on my portion and that x should probably help with any tax the IRS says I owe when OPM gets finished with us, since he claimed the taxes as his own and received a refund from it. Does this make sense? I know it's going to be a messy thing to sort out and returns will need to be amended, just want to know if I should be able to expect x's help or not.=====>basically, Federal benefits are not subject to ERISA, the law used to divide private sector retirements. Rather, the OPM governs how benefits may be awarded and requires certain orders or wording in a decree based on a separate law;however, X does not need to pay tax on your portion since your portion of the benefits actually paid to you not to X; aslongas the money received as a direct distribution from the retirement or pension plan consists of pre-tax dollars, income taxes will have to be paid by you , the recipient of the money. Generally, sometime during the month of January, the Plan will send to the recipient (distributee) an IRS 1099-R form (similar to the W-2 that employers send to their employees) showing the total gross amount of the distribution and how much (if any) was withheld for income taxes. You as a former spouse to receive a benefit:X were married to you for at least 9 months;X performed at least 18 months of creditable civilian service; you as a former spouse to whom X were married less than 30 years has not remarried before age 55.X can only claim the payments as deductions if they were ordered as spousal support payments to you.



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Old 11-10-2016, 11:46 PM
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More info, maybe helpful?

Thanks for the response Wnhough. To clarify, marriage was 30+ years, and x took early retirement (after reaching age 55 and being employed for over two decades) a couple of years before divorce and was receiving his monthly payments direct deposited to joint checking account, as they still are.

Divorce was noncontested and we worked amicably with a lawyer to help us divide assets and provide for the kids. He received half of my retirement savings rolled over into an IRA and was able to withdraw it four months later, I believe as he had reached the right age for that. The settlement paperwork details that we split his pension 50/50 as well; no set amount, simply 50/50. It is not alimony or spousal support, but rather a division of this marital asset.

The kids live with me but as his insurance was much better it was agreed and written into the settlement that he continue their coverage (my coverage dropped off, of course). His child support payment is reduced by the health coverage amount. We split evenly any other medical expenses. Neither of us files Sched A so itemization isn't an issue.

Since the divorce in 2015, his monthly retirement check has continued to be deposited into our joint checking account. We initially split the net 50/50, then 8 months later 50/50 of the net plus half the health insurance premium the paperwork instructs that he pay for himself and the kids. The net has already had taxes taken out of it which means my half was already taxed (if that makes sense), but he filed for 2015 and (will file) for 2016 using the 1099R that is in his name only. When OPM gets it all sorted out and we start getting separate amounts, they will backdate the record showing I received my portion and x got his portion, so x and I will both need to amend our returns. X's 2015 return reflects all of the taxes paid, I had no 1099R to file with so the pension income and its tax were not reported on my return, only x's return.

I have not actually seen the 1099R so I don't know how much tax is taken out from the retirement payment. I suppose I should ask to see that some time, I may be worrying over nothing.

Ultimately I guess we're stuck waiting for OPM to do its job and see where we land. I have looked online for some timeline or estimate on how long it should take, but I find nothing.

We trudge on. Thanks again.



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Old 11-10-2016, 11:48 PM
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Thanks for the response Wnhough. To clarify, marriage was 30+ years, and x took early retirement (after reaching age 55 and being employed for over two decades) a couple of years before divorce and was receiving his monthly payments direct deposited to joint checking account, as they still are.

Divorce was noncontested and we worked amicably with a lawyer to help us divide assets and provide for the kids. He received half of my retirement savings rolled over into an IRA and was able to withdraw it four months later, I believe as he had reached the right age for that. The settlement paperwork details that we split his pension 50/50 as well; no set amount, simply 50/50. It is not alimony or spousal support, but rather a division of this marital asset.

The kids live with me but as his insurance was much better it was agreed and written into the settlement that he continue their coverage (my coverage dropped off, of course). His child support payment is reduced by the health coverage amount. We split evenly any other medical expenses. Neither of us files Sched A so itemization isn't an issue.

Since the divorce in 2015, his monthly retirement check has continued to be deposited into our joint checking account. We initially split the net 50/50, then 8 months later 50/50 of the net plus half the health insurance premium the paperwork instructs that he pay for himself and the kids. The net has already had taxes taken out of it which means my half was already taxed (if that makes sense), but he filed for 2015 and (will file) for 2016 using the 1099R that is in his name only. When OPM gets it all sorted out and we start getting separate amounts, they will backdate the record showing I received my portion and x got his portion, so x and I will both need to amend our returns. X's 2015 return reflects all of the taxes paid, I had no 1099R to file with so the pension income and its tax were not reported on my return, only x's return.

I have not actually seen the 1099R so I don't know how much tax is taken out from the retirement payment. I suppose I should ask to see that some time, I may be worrying over nothing.

Ultimately I guess we're stuck waiting for OPM to do its job and see where we land. I have looked online for some timeline or estimate on how long it should take, but I find nothing.

We trudge on. Thanks again.



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Old 11-11-2016, 01:03 AM
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[quote=tmom;32615]QUOTE]

Divorce was noncontested and we worked amicably with a lawyer to help us divide assets and provide for the kids. He received half of my retirement savings rolled over into an IRA and was able to withdraw it four months later, I believe as he had reached the right age for that. The settlement paperwork details that we split his pension 50/50 as well; no set amount, simply 50/50. It is not alimony or spousal support, but rather a division of this marital asset. ====>In terms of value, retirement plans tend to be the largest marital asset in a divorceThen as said, In community pty states following a community property or equitable distribution doctrine, retirement benefits under a qualified retirement plan are considered to be marital property based on the reasoning that the benefits resulted from the efforts of both spouses.



The kids live with me but as his insurance was much better it was agreed and written into the settlement that he continue their coverage (my coverage dropped off, of course). His child support payment is reduced by the health coverage amount. We split evenly any other medical expenses. Neither of us files Sched A so itemization isn't an issue.==>OK I see whay you mean .Correct ;

The net has already had taxes taken out of it which means my half was already taxed (if that makes sense), but he filed for 2015 and (will file) for 2016 using the 1099R that is in his name only. When OPM gets it all sorted out and we start getting separate amounts, they will backdate the record showing I received my portion and x got his portion, so x and I will both need to amend our returns. X's 2015 return reflects all of the taxes paid, I had no 1099R to file with so the pension income and its tax were not reported on my return, only x's return. ===>Agreed; 1040X for 2015 are required to be filed for both you and X to report accurate amounts of pensionincome when OPM gets it all sorted out and you and x start getting separate amounts.

I have not actually seen the 1099R so I don't know how much tax is taken out from the retirement payment. I suppose I should ask to see that some time, I may be worrying over nothing.==>>Agreed;

Ultimately I guess we're stuck waiting for OPM to do its job and see where we land. I have looked online for some timeline or estimate on how long it should take, but I find nothing.===>>Neither do I you probably need to contact OPM for more info .good luck ~



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Old 07-12-2017, 08:52 AM
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Quick update for anyone wondering how long it takes the IRS Office of Personnel Management to sort out division of retirement pay in a divorce: We are still waiting 26 months on.

In February 2017 they finally responded to a letter sent by x and stated they had received the paperwork in September 2016, and that they had six months from that time to let us know if the settlement was acceptable.

We are now ten months on from their receipt of the paperwork, and have heard nothing. No response yet to the latest letter sent two months ago. In the meantime we will each now have two years (so far) of amended tax returns to file for both federal and state.

Something is seriously wrong in the IRS OPM, and it doesn't seem to be answerable to anyone or anything. :/



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