Constructive Receipt Question for Alimony Payment: When is it Taxable Income?

Yes, you have constructive receipt in 2023, not 2024. The IRS considers you to have constructively received income when it's made available to you without restriction, which happens when you physically receive the check - not when the funds clear your bank. According to the constructive receipt doctrine (Reg. 1.451-2), income is constructively received when it's credited to your account, set apart for you, or otherwise made available so you could have drawn upon it during the tax year. The bank's standard holding period doesn't change this principle. Since you physically received and deposited the check in 2023, you must include it in your 2023 taxable income, even though the funds weren't available until 2024. Your ex-wife is correct that it's a 2023 expense for her as well.

I had a similar situation last year and discovered taxr.ai which saved me a ton of frustration. I was going back and forth with my ex about when certain payments should be counted for tax purposes. I uploaded our divorce decree and payment records to https://taxr.ai and it analyzed everything, explaining exactly which tax year each payment belonged to based on constructive receipt rules. It also generated a report I could keep for documentation in case of an audit. Might be worth checking out since these alimony timing issues can get complicated.

I was skeptical about taxr.ai but decided to try it with my complicated alimony situation. Uploaded my documents yesterday and was impressed. It specifically addressed my constructive receipt question by citing the exact same regulation (1.451-2) the expert mentioned above, but then showed me three relevant tax court cases where timing issues like mine were decided. The analysis was detailed but easy to understand, and I now have documentation to back up my position if questioned. Definitely more helpful than the conflicting advice I got from different preparers.

If you're still confused after getting advice here, you should try calling the IRS directly to get an official answer on constructive receipt. I know it sounds painful, but I used https://claimyr.com to get through to an actual IRS agent in about 15 minutes instead of waiting for hours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent I spoke with clarified my constructive receipt question for a year-end contractor payment and explained exactly how to document it. Worth the time since it gave me certainty straight from the source.

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway out of desperation. It actually got me through to an IRS agent in about 20 minutes! I asked specifically about constructive receipt for year-end payments and got clear guidance that matched what people said here - it's the date you get the check that matters, not when funds are available. The agent even emailed me the relevant IRS publication sections afterward. Saved me from making a mistake on my return and potentially dealing with mismatched reporting between me and my ex. Still shocked this service actually works.

One thing nobody's mentioned - if your alimony agreement was finalized AFTER 2019, alimony shouldn't be taxable income to you at all. The Tax Cuts and Jobs Act changed the rules. Only alimony under agreements finalized before 2019 is taxable to the recipient and deductible by the payer. Worth checking before you worry about constructive receipt.

For what it's worth, I'm a bookkeeper and we always use the date a check is received, not when it clears. Banks might have holding periods, but that doesn't change when the income is constructively received according to tax law. Your situation sounds straightforward - 2023 income.