Question: My spouse has offered me cash settlement in our divorce. Do I have to pay taxes on this settlement, and is he going to claim it on his income tax. If this is taxable, is there any way around it?
Answer: You should discuss the entire settlement offer with your CPA and lawyer, to ensure it is fair and to evaluate the tax implications. For example, in divorces finalized before 2019 an alimony settlement is taxable while a property settlement is not (Beginning January 1, 2019 alimony payments are not taxable). Ultimately, how the settlement is described in the divorce papers is very important in this respect. You need to have an attorney handle this for you.