Purge fee

[Possi]

My client's ex went to jail for not paying spousal support. In order to get out of jail, he had to pay a "purge fee" to her.

I would think this is considered back alimony and all taxable. What confuses me is that it is called a "purge fee" and I know alimony must be alimony.

Does anyone agree that I should include this in her income? It's a sizable amount, worth asking. Not that the amount has anything to do with the question of law, just that it will change her tax picture.

[jklcpa]

Disclaimer: I didn't research this and haven't had any clients deal with this on either side, but I'd say that it is alimony that your client received. The purge is imposed because the court felt that this person had the resources to pay his obligation and didn't meet that payment on time, and that failure caused him to be held in contempt. I could be wrong, but I think that the funds your client received was the back alimony that was due her, and it took court action and collection by the court in order for her to get it.  Thinking about it from another angle, there is no other type of payment that she would be due, like any sort of punitive damages related to the nonpayment, so I'd say that it is the back alimony that was owed to her.

What did you decide?

[Possi]

2 hours ago, jklcpa said:

Disclaimer: I didn't research this and haven't had any clients deal with this on either side, but I'd say that it is alimony that your client received. The purge is imposed because the court felt that this person had the resources to pay his obligation and didn't meet that payment on time, and that failure caused him to be held in contempt. I could be wrong, but I think that the funds your client received was the back alimony that was due her, and it took court action and collection by the court in order for her to get it.  Thinking about it from another angle, there is no other type of payment that she would be due, like any sort of punitive damages related to the nonpayment, so I'd say that it is the back alimony that was owed to her.

What did you decide?

That is exactly what I was thinking, too. I had never heard of purge fees. We will claim it as alimony. A court had to force him to pay it, but it's alimony all the same. Thanks for the validation.