Brokerage, traditional IRA, Roth and home equity are different
A taxable brokerage balance includes the economic effect of cost basis and possible gain when holdings are sold. Traditional IRA withdrawals generally enter federal taxable income except for applicable basis or other exclusions. Roth IRA qualified distributions have different treatment, and nonqualified distributions require separate review.
Home equity is not an investable account balance: access can involve a sale or borrowing, transaction costs and ongoing housing expenses. Compare each asset's after-tax liquidity and role in a single-household income plan, not an assumed tax-savings percentage. Ask a tax professional to review actual records privately.
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Property transfer is not a new tax basis
Under the federal rules described in IRS Publication 504, transfers to a spouse, or to a former spouse incident to divorce, generally do not produce recognized gain or loss. Exceptions apply, including certain transfers to a nonresident alien spouse.
The recipient generally takes the transferor's adjusted basis rather than a new market-value basis. A later sale can produce taxable gain. Preserve purchase, improvement and prior adjustment records; equal account or property values may have different after-tax consequences.
Alimony depends on the instrument's date and terms
For divorce or separation instruments executed after December 31, 2018, alimony generally is not deductible by the payer and is not included in the recipient's federal gross income.
Qualifying alimony under instruments executed before 2019 generally follows the earlier deductible-to-payer and taxable-to-recipient treatment. A post-2018 modification can adopt the newer rules if it expressly states that they apply. Older instruments and other exceptions need individual review.
Child support is treated differently from alimony. State tax treatment can differ from federal treatment. Have a tax professional review the actual instrument, modification history and current law rather than relying on a label or payment date.
Prepare a tax discussion
Bring basis records and the executed instrument to your tax professional through a secure channel, not through this website. Ask about filing status, estimated tax, retirement distributions and future sale assumptions.
This is general education based on the IRS publication, not a tax return preparation service or a recommendation for a particular settlement.