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Share of 50%of Equitable distribution pay tax? ( husband’s…

Share of 50%of Equitable distribution...
Share of 50%of Equitable distribution pay tax? ( husband’s compensation )At the divorce settlement, Share of Marital assets, liquid assets, retirement accounts pay tax?Who’s paying tax on?Wife has not worked for 20-30 years, living NY.
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Answered in 14 minutes by:
12/20/2017
Lucy, Esq.
Lucy, Esq., Lawyer
Category: Family Law
Satisfied Customers: 32,264
Experience: Attorney with experience in family law.
Verified

Hi,

I'm Lucy, and I'd be happy to answer your questions today.

Cash held as a marital asset should have been taxed to both of you at the time you originally received the money (usually that's your paychecks, but also as rent or interest, dividends, etc.). That's not taxed again following an equitable distribution. If you were to sell the marital home, there could be capital gains taxes, which would ordinarily be split by both of you. You can agree otherwise if you are doing a settlement agreement.

Funds in a retirement account are going to be taxable to the person receiving the money at the time it's withdrawn. It's treated like a normal retirement account. If you start taking monthly distributions, the income from those distributions will be reported to the IRS and taxed at the end of the year. You should have the option of having taxes withheld before you take the money out, which tends to make things a little easier. But that's not something you pay as part of the divorce unless you choose to take a lump sum distribution and put the money into a non-retirement account (or spend it).

Under existing law, alimony payments would be a tax deduction for the spouse paying and taxable income for the spouse receiving it. However, the tax bill that Congress will soon be voting on eliminates that provision. If you don't have an existing alimony order, the new law could affect you.

If you have any questions or concerns, please reply WITHOUT RATING so I may address them. My goal is to provide you with excellent customer service. Otherwise, please rate my answer positively so I get credit for assisting you today. Mobile users may have to scroll to the right. Thank you.

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Customer reply replied 7 months ago
Pay tax on deferred compensation?
Pay tax on Marital assets? ( lawyer calls marital asset )
Pay tax on appreciation of assets?Yes or no, thank you,

You pay tax on deferred compensation when you withdraw the money from the account.

Whether to pay tax on marital assets depends on what the asset it. But for most non-retirement assets, no. Like I said, you paid taxes on most assets as a couple when you originally acquired it.

Whether to pay tax on appreciation of an asset is also going to depend on what it is. If you're talking about real estate that's being sold to a third party, yes.

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Customer reply replied 7 months ago
For differed compensation, let’s say $400,000 now. Split to $200,000, at the time of divorce.
At the time of divorce, I am receiving $200,000 or after tax?

You get $200,000 if you put it in your own retirement plan to be drawn from later. If you take a lump sum, you'd have to pay taxes on it.

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Customer reply replied 7 months ago
After put into my retirement, how much I pay tax on?Put in Retirement means you can’t use it?Until what age?

You'll only pay taxes on when you withdraw it, and only on the amount withdrawn. The percentage is going to be based on your total income and deductions, not to mention changes to the tax code, so there's no way to know exactly how much it'll be.

Look at the specifics of the plan. Some deferred compensation plans do not allow them to be split in a divorce, which would mean you'd be getting a portion of your husband's distributions when he takes them, rather than any money now. And that could also mean that you have to wait until he retires to get it. The plan might also set a minimum retirement age. Depending on what the documents say, it's possible that you won't be able to access anything now.

Lucy, Esq.
Lucy, Esq., Lawyer
Category: Family Law
Satisfied Customers: 32,264
Experience: Attorney with experience in family law.
Verified
Lucy, Esq. and 87 other Family Law Specialists are ready to help you
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Customer reply replied 7 months ago
Some are Retirement accountant, how can I find out how much I pay tax on?
I am 60 years old, if I spend now, am I paying penalties?

You'll pay tax on the amount withdrawn each year.

For an IRA or 401(k), there would be no penalty for withdrawal now because you're over the minimum age of 59 1/2. For a pension, you'd have to look at the specific terms of the pension, which you should be able to get from the company's HR Department.

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