Have a Tax Question? Ask a Tax Expert
Hi my name is XXXXX XXXXX I will be helping you today with your tax question.
No you will not, there is no tax on a divorce settlement
Only on any annual alimony received
The settlement was from assets of your exhusband which he already paid tax on when he earned the income therefore when it is paid out as a divorce settlement it is not taxable.
If you receive alimony each year then that is taxable income.
THE SETTLEMENT WAS PRIMARILY FROM HIS 401K. DOES THIS CHANGE MY TAX SITUATION?
Yes, If he liquidated it on his own and then paid you cash directly then he will be taxed on the 401k distribution. If you take his 401k though and roll it into a 401k of your own that would avoid the tax.