Is equitable distribution taxable?

Is equitable distribution taxable?

Generally speaking money received as part of the equitable distribution of property incident to a separation is not taxable. It is important to note that this non-taxable status of money transferred from one spouse to another, is ONLY applicable to the equitable distribution of property.

Is a lump sum payment in a divorce settlement taxable?

Lump sum payments of property made in a divorce are typically taxable.

Is an equalization payment taxable?

Equalization payments aren’t taxed but property transfers are. Additionally, transferring funds between Registered Retirement Savings Plans (RRSPs) comes with no tax consequences and could be a good option for both parties.

Is money received in a divorce settlement taxable?

Generally, money that is transferred between (ex)spouses as part of a divorce settlement—such as to equalize assets—is not taxable to the recipient and not deductible by the payer.

Is settlement money considered income?

Settlement money and damages collected from a lawsuit are considered income, which means the IRS will generally tax that money, although personal injury settlements are an exception (most notably: car accident settlement and slip and fall settlements are nontaxable).

How does getting divorced affect your taxes?

When filing taxes after divorce, you may also be eligible to file taxes using the head of household status. As mentioned above, this will affect your income tax brackets when filing taxes after divorce. In that case, the noncustodial parent is eligible to claim the Child Tax Credit and the Additional Child Tax Credit.

Should CPAs prepare tax returns for a divorced couple?

CPAs should avoid all invitations and opportunities to characterize income or assets as community or separate. Unless the CPA has terminated the professional relationship with one of the spouses formally and in writing, they should refrain from providing tax advice until the divorce has been finalized.

Why do ex wives keep last names?

Reasons women may want to keep their ex-husband’s last name Continuity with children — One of the most common reasons an ex may keep your last name is to keep her name the same as any children. Even though you are getting a divorce, your wife has likely spent the marriage building a brand for herself around that name.