Alimony paid to non resident alien

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Is alimony paid to non US citizen with no ITIN tax deductible? The client paid alimony to his ex wife but the ex wife is NRA. PTO is asking for SSN when putting Not Applicable

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itonewbieAnswer

Level 15

Based on your question, my presumption is that the agreement was executed before 2019 and your client is a US resident.

For purposes of claiming the deduction, ITIN/SSN is not technically required. Not sure if you could override the critical diagnostic to e-file though. If not, you may need to paper file the return.

Your client, however, is required by law to establish whether the NRA recipient is exempt from US tax with respect to the alimony received by domestic statues or tax treaty. A W8-BEN would be required and an ITIN is necessary for withholding, remittance, and reporting.

If your client did not fulfill the fiduciary duty to withhold, remit, and report, he could be held liable for the actual tax that is otherwise due from the recipient and subject to various penalties.

---------------------------------------------------------------------------------Still an AllStar

itonewbieAnswer

Level 15

Based on your question, my presumption is that the agreement was executed before 2019 and your client is a US resident.

For purposes of claiming the deduction, ITIN/SSN is not technically required. Not sure if you could override the critical diagnostic to e-file though. If not, you may need to paper file the return.

Your client, however, is required by law to establish whether the NRA recipient is exempt from US tax with respect to the alimony received by domestic statues or tax treaty. A W8-BEN would be required and an ITIN is necessary for withholding, remittance, and reporting.

If your client did not fulfill the fiduciary duty to withhold, remit, and report, he could be held liable for the actual tax that is otherwise due from the recipient and subject to various penalties.

---------------------------------------------------------------------------------Still an AllStar

Q

qwertyuiAuthor

Level 3

Thank you @itonewbie ! however the client can no longer and also don't want to contact the ex spouse. I read that he can instead withhold 30% tax, where can I add additional withholding tax int PTO?

"If recipient lives in the country that does not have such exemption, then the payor must withhold 30% tax from alimony payment amount and pay to the IRS on behalf of the non-resident spouse. Alternatively, the foreign spouse should obtain a U.S. tax ID number, file form 1040NR (U.S. non-resident tax return), report receipt of the alimony and pay tax themselves."

itonewbie

Level 15

Your client can't put the withholding through his tax return. The certification, withholding, remittance, and reporting requirements explained in the original response are governed by different chapters and sections of the IRC compared to the filing of F.1040 and payment of the balance due on that return from the taxpayers concerned.

Furthermore, if your client decides to pay the tax on behalf of the ex, that payment most likely does not constitute deductible alimony and there may be gift tax considerations.

[Minor edits]

---------------------------------------------------------------------------------Still an AllStar

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