Ask a CPA

Generally, alimony payments are not taxable or deductible if you live in the same household as your divorced or legally separated spouse. But, if you are separated under a written agreement, but not legally separated under a decree of divorce or separate maintenance, then you may claim the deduction. Speak to a local CPA about this in greater detail.

For 2016:
The Tax between 0 and $13,250 = 10%,
between $13,251 and $50,400 the Tax = 1,325 plus 15% over 13,250
between $50,400 and $130,150 the Tax = 6,897.50 plus 25% over 50,400,
between $130,150 and $210,800 the Tax = 26,835 plus 28% over 130,150,,
between $210,800 and $413,850 the Tax = 49,417 plus 33% over 210,800
>between $413,350 and $441,000 the Tax = 116,258.50 plus 35% over 413,350
over $441 the Tax = 125,936 plus 39.6% over 441,000

Form 1099-C is issued by banks, credit unions and federal government agencies that forgives or cancels a debt that you owe $600 or more. Generally the amount in box 2 must be reported as other income on Form 1040 line 21 unless one of the exclusions applies.

You can claim the exclusion for qualified principal residence indebtness on Form 982 by checking the box on line 1e and entering the excludable amount on line 2. If you continue to own the residence you must reduce the basis on line 10b.

You are allowed to exclude cancelled debt from gross income if it is qualified principal residence indebtness. Qualified principal residence indebtness is debt incurred in acquiring, constructing, or substantially improving your principal residence and which is secured by your principal residence. It also includes debt secured by your principal residence that refinances debt incurred in acquiring, constructing, or substantially improving your principal residence but only to the extent of such refinanced debt. The maximum exclusion is 2 Million or 1 million if filing separately.

If a debt is cancelled or forgiven other than as a gift or bequest the debtor generally must include the cancelled amount in gross income for tax purposes. Qualified principal residence indebtness is excluded from income. Exclusions are also allowed for business real estate debt or farm debt of insolvent and bankrupt individuals. The exclusions are allowed for up to 2 million of debt.

The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for this relief. This provision applies to debt forgiven in calendar years 2007 through 2013. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if (MFS).

A resident Alien is taxed on Worldwide income from all sources just like a US citizen. The exclusion for foreign earned income may be claimed. A resident alien may claim a foreign tax credit. A resident alien pension from a foreign government is subject to US tax. A resident alien working in the US for a foreign government is not taxed on the wages if the foreign government allows a similar exemption.

A Nonresident Alien is generally taxed only on income from US sources. Nonresident aliens income that is connected with a US business and Capital gains from the sale of US real property interests are subject to tax at regular graduated US rates. Generally investment income from US sources that is not connected to US business is subject to a 30% tax rate. Nonresident aliens are required to file on Form 1040NR. IRS Pub 519 explains how Nonresidents are taxed.

You are a resident alien of the United States for tax purposes if you meet either the Green Card Test or the Substantial Presence Test for calendar year 2013. Even if you do not meet either of these tests, you may be able to choose to be treated as a U.S. resident for part of the year. You are a resident for tax purposes if you are a lawful permanent resident of the United States at any time during calendar year 2013. This is known as the “green card” test. You are a lawful permanent resident of the United States at any time if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Services (USCIS) (or its predecessor organization) has issued you an alien registration card, also known as a “green card.” You continue to have resident status under this test unless the status is taken away from you or is administratively or judicially determined to have been abandoned. You will be considered a U.S. resident for tax purposes if you meet the Substantial Presence Test for calendar year 2013. To meet this test, you must be physically present in the United States on at least: 31 days during 2013, and 183 days during the 3-year period that includes 2013, 2012, and 2011, counting: All the days you were present in 2013, and 1/3 of the days you were present in 2012, and 1/6 of the days you were present in 2011. If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of the two tests described for a Resident Alien.