Do I pay taxes on divorce settlement money?

Do I pay taxes on divorce settlement money?

Maintenance payments made by a spouse or that are attributable to a payment made by a spouse is exempt income of the receiving spouse. If a spouse receives income from an existing trust as maintenance payments instead of directly from the other spouse, tax will be payable on that income.

Is alimony taxed at the same rate as income?

For recently divorced Americans, alimony payments are no longer tax-deductible for the payer, and they aren’t considered taxable income for the person receiving them, ending a decades-long practice. The changes affect divorce agreements signed after Dec. 31, 2018. The tax code changes will also affect IRAs.

Is maintenance considered alimony?

Maintenance, or alimony, refers to payments made by one spouse to the other to assist with the support of the recipient spouse. They may also terminate upon remarriage or cohabitation of the supported spouse. Payments received are usually taxable for the recipient spouse and tax-deductible for the paying spouse.