Question

Course Scenarios and enarios and Test Questions Directions The first five sen d t require you to prepare a tax return. Read the interview hotes for each scenarie carefully and use your training and resource materials to answer the questions after the scene Advanced Scenario 1: Tamara Dennison Interview Notes Tamara is 52 years old and her divorce became final on September 20, 2014 and has not been modified. The divorce decree stipulates she is required to pay alimony of $500 a month to her ex-husband. She paid him a total of $6,000 in 2019 Tamara pays all the cost of keeping up her home in the United States. She earned $40,500 in wages in 2019, her only income. Tamara's daughter, Kimberly, lived with Tamara all year. Kimberly is 18 years old, Single, and earned $8,000 in wages. Kimberly's son, Christian, was born on December 2, 2019. Christian lived in Tamara's home all year. Tamara provides more than half of the support for both Kimberly and Christian. Tamara, Kimberly, and Christian are all U.S. citizens with valid Social Security numbers. wanced Scenario 1: Test Questions 1. Tamara and her ex-husband's divorce was final before December 31, 2018. How does this affect their 2019 tax returns? a. Tamara is not eligible to deduct alimony paid as an adjustment to income. Her ex-husband is not required to report alimony received as income. b. Tamara is not eligible to deduct alimony paid as an adjustment to income. Her ex-husband is required to report alimony received as income. Tamara is allowed to deduct alimony paid as an adjustment to income Her ex-husband is not required to report alimony received as income. d. Tamara is allowed to deduct the alimony paid as an adjustment to income. Her ex-husband is required to include the alimony received as income.

Answer 1

Guidance on Payment to Ex-Spouse :

If a divorce agreement was finalized by January 31, 2018, there is no change in the federal income tax treatment of divorce-related payments (e.g. alimony payments). Alimony payments still qualify as deductible expense for the alimony payer, if the time-honored list of specific tax-law requirements apply. Thus, alimony payments can be written off on the payer’s 2019 1040 IRS Income Tax Return. As a result, the expense does not need to be itemized. The recipient of 2019 alimony payments must list these payments as income on their 2019 Tax Return

Hence Answer is D - Tamara is allowed to deduct alimony paid as an adjustment to income. Her ex-husband is required to include the alimony received as income