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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7117
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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okay, my sister was just divorced and recieved a lump sum of190k,

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okay, my sister was just divorced and recieved a lump sum of190k, is there taxes on that ? does she have to report that to the irs?

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Customer:

did you look at my question?

Stephen E. Grizey :

Generally, no & no. Unless part of the settlement was from a retirement plan & she didn't keep it in one of her own plans, or it related to a house sale or some other taxable liquidation of assets, or a portion was alimony, then it wouldn't be taxable.

Stephen E. Grizey :

Can you tell me any more about the terms of the settlement or how it was funded?

Customer:

well, some of the money is going to a condo, credit card debt and paying off a car

Customer:

it breaks down to 130 for condo, 20k for the car and 15k for the credit card debt and the rest is cash

Stephen E. Grizey :

It doesn't matter where it is going, it matters where it came from.

Customer:

its just a cash lump sum

Stephen E. Grizey :

Well, it shouldn't be taxable; if there were any tax consequences, they should have been spelled out in her divorce settlement agreement.

Customer:

well everyone knows how divorces go....lol

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