Most North Carolina residents don’t have as much money as Johnny Depp, but the actor’s divorce from actress Amber Heard can still teach some important tax lessons. After a very public breakup, the couple settled their divorce with an agreement that Depp would pay Heard $7 million in alimony. Instead of receiving the money, Heard allowed Depp to send it as donations to Children’s Hospital Los Angeles and the American Civil Liberties Union.
It is very unusual for the lower earning spouse in a divorce to give away a lump sum alimony payment. However, the most unusual part of Depp and Heard’s divorce agreement was the way that Depp made his alimony payment. Depp sent the money to the children’s hospital and the ACLU himself instead of giving the money to Heard so that she could make the donations.
Because he made direct charitable contributions, Depp will be entitled to take a charitable deduction on his 2016 tax report. Heard, on the other hand, could end up owing taxes on money that she never received. The charitable deduction could save Depp $3.5 million on his tax bill, so it will be as though he only paid $3.5 million in alimony. Heard has reportedly argued that the payment was a mistake, and Depp should have made a $14 million charitable contribution. However, the payment was already made, and the divorce has been finalized.
A person who is going through a divorce that involves spousal support payments or a complicated property division agreement may want to go over the divorce agreement with an attorney before it is finalized. An attorney may be able to help an individual to understand the tax consequences of various alternatives so that there are no surprises later on.