Tax Implications of Monetary Divorce Settlement in Installments

[Charlene7302]

I was married and reside in California. My spouse and I have decided that to cover the equity in the home we own together (that he will keep) and other expenses/saving reimbursements he will pay me from his personal checking account $40K in 4 installments. $10K on 8/1/14, $10K on 1/1/15, $10K when we file the official paperwork and $10K when the divorce is finalized. I want to make sure that this installment plan is not taxable to either of us and if so, how we can structure it so it is not?

I'd appreciate any help as I'm the one that doesn't have very much money.

 

[LdiJ]

I was married and reside in California. My spouse and I have decided that to cover the equity in the home we own together (that he will keep) and other expenses/saving reimbursements he will pay me from his personal checking account $40K in 4 installments. $10K on 8/1/14, $10K on 1/1/15, $10K when we file the official paperwork and $10K when the divorce is finalized. I want to make sure that this installment plan is not taxable to either of us and if so, how we can structure it so it is not?

I'd appreciate any help as I'm the one that doesn't have very much money.

It won't be taxable to you, period. Cash received from a divorce property settlement is not taxable to the receiver. Whether or not the money ends up being taxable to your spouse depends on where he sources the money.