Do I have to report this income on my tax return?

Question

Sold a community house with a profit of $75k, then divorced immediately. I took no $ from the sale at all. Do I have to claim this as "my" income for 2006 tax return? Ex has claimed all income as her own.

Answer 1

you should check with your divorce attorney. it sounds like it was part of the marriage settlement and if so it is PROBABLY not income to you, but you should investigate further..... your correct answer will not be here.

Answer 2

If the house which was sold was in your own name, the funds from the sale were not held in escrow pending a divorce settlement, and it was not your primary residence for the past 2 years, then yes!

You must then offest this income and all other income with all divorce expenses for that year. I would recommend keeping your documents from your divorce and requesting a copy of your ex-wife's tax returns as proof in the event of an "unlikely" audit. She may also write a letter confirming this.

If you have already sent in your taxwork, you may be asked to amend it.

In the future, as a general rule of thumb; ALL income earned in your name must be reported! All income earned is taxable unless otherwise expressly stated though appicable exemptions and deductions.

I kid you not;

If you earn income from selling illegal drugs, you must report this income on your tax return.

If you earn income in the form of a bribe, you must report this income on your tax return.

The IRS is not a law enforcement agency, (at least that's not their main objective), they just want your money, and thier fair share. They don't care if you're running a brothel, they just want you to be honest with how much you make, and give them their due.

Furthermore, if anyone has a higher chance of being audited, it is your ex-wife. They will want to see where this income came from, and proof of the actual amount. They are more concerned about the correct income amount, than the correct expense amount!

I hope this was helpful, make and future corrections as necessary, but sleep easy, there's nothing too serious to worry about. According to what you said, you have zero tax liability for the entire amount.

Answer 3

if the house was your main residence for two of the 5 years previous to date of sale there would be no tax due.

if less than 2 years then it would depend on if the sale was reported to the IRS. Usually sales made through a broker or closing agent is reported to the IRS and it would have been with a social security number. So if it was reported in your name with your SS number, it would be your tax burden. If your wife pays the tax on it,, then you could inform IRS if they question you about this. You might want a copy of your brides tax return just in case.

Answer 4

As long as you have a written statement from your ex that she claimed all the profit you are free of tax liability. She has all the tax burden as well as all the profit.

If she is a spiteful person she might not give you a letter like that just to hassle you. Luckily you two split on amicable terms.

Answer 5

tell her to claim it.