Is divorce settlement money considered income?

Is divorce settlement money considered income?

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.

How much tax do you have to pay on alimony?

The spouse receiving the alimony payments is not required to pay taxes on those payments like other earned income, as it is already being paid by the supporting spouse. Prior to 2018, alimony was treated as income, just as wages and salaries are treated, and generally taxed somewhere between ten and thirty percent.

Is alimony calculated on gross or net income?

States that base alimony calculations on net income typically begin with gross income, then apply a uniform, statutory list of allowable deductions. Your net income in these jurisdictions is not necessarily what your paycheck says you bring home each week.

Who pays the tax on alimony?

Spousal support (commonly referred to as alimony) is considered fully taxable in the hands of the former spouse or common-law partner.