Divorced in '07. rec'd lump sum buyout of 17k...is it taxable?

There are too many other questions. Where did the money come from? Is your Ex planning to claim the payment? What was the divorce decree? I suggest you see a Tax Pro, together with your Ex since you seem to be cooperating, and settle all the variables in a written agreement prior to filing taxes. You could really cause each other problems if you file independently without coordinating the two tax returns. The cost of the Tax Pro (one with liability insurance) will be peanuts next to the potential penalties and interest the IRS could impose.

Was this court ordered? Did the reward come through the court? Or did he just write you a check for 17 grand even though he was not required to do so?

Settlement payments are considered as taxable alimony if all of the following apply:

Payments are required by a divorce or separation instrument.

Payer and recipient spouse do not file a joint tax return.

Payment is in cash, check or money order.

Payment is not specifically designated in the instrument as not alimony.

Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household.

Payments are not required after the death of the spouse.

Payment is not treated as child support.

If all the above are true, the payment is deductible by the payer and is includible as income to the recipient.

I dont know if you have to pay taxes on it but you better report it since you KNOW that he will!

I would think that the answer to your question would be based on how this money is classified. Is he stating this is a loan repayment, is he calling it alimony, a settlement. I believe that the rules for each are different.

Is this a court ordered 'buyout'

If you get the turbotax cd, there is a section there regarding this

I suggest you get it and check it out, the best $39.00 that you ever spenT!

from what you have stated, the 17k is not taxable.

its kind of like what i did not too long ago....i sold an old truck i bought a long time ago...i do not have to report any of the money i got from the sale.

in essences that is what happend in your case.

All of your monetary shifts are about after-tax dollars, and is therefore not taxable. The only way you'd need to worry about any of those funds being taxable is if it were in an investment account that was cashed in, a home you had to pay capital gains on, etc.

no, read the publication about property settlements through a divorce at irs.gov