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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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is a lump sum payment in a divorce settlement taxable ...

Customer Question

is a lump sum payment in a divorce settlement taxable income to the receiving spouse. What if lump sum is paid over time??????
Submitted: 11 years ago.
Category: Tax
Expert:  Jon Andrews replied 11 years ago.

Generally, any payment that is made in respect of a divorce settlement is non-taxable unless the settlement is structured to specifically make it taxable.

Lump sum payments are not taxable. An amount that is paid over a period of time can be structured to be taxable as alimony to the receiving spouse and deductible by the paying spous.

If your goal is for the payment to be non-taxable, you are, generally, safer with a lump sum.

To the extent that a payment is made from a 401k or other retirement account of the paying spouse, there could be tax consequences. The receiving spouse has some options in these circumstances. If this applies to you, let me know and I will discuss that further.

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