Alimony, also called spousal support, is payments made by one spouse to another following divorce.
In the days when most women kept house and cared for the children and their husbands were the breadwinners, men were usually the ones to pay alimony. But these days, either men and women can be ordered to pay alimony to their ex.
The payer of alimony is called the “obligor” and the recipients of alimony are “obligees.”
How Does Alimony Work?
Alimony is typically paid to the obligee to maintain the marital lifestyle, especially if there is a work experience or education disparity between the parties. Alimony might also be awarded to an unemployed or underemployed spouse to help him or her get the training or education they need to get a job.
Alimony can also be ordered to reimburse the obligee for a situation such as working while the obligor attended graduate school full-time.
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How Is Alimony Calculated?
In most states, as part of a divorce proceeding, the parties submit Case Information Statements to the court in which they disclose the details of their respective financial situations. Sometimes the parties agree as to who received alimony and how much, however, this is not usually the case. Alimony is one of the most hotly contested issues in divorce law.
Where alimony is contested, the attorneys for the parties make their arguments to the judge, and in many states the judge decides using the five factors set forth in the Uniform Marriage and Divorce Act (UMDA).
- The obligee’s financial condition
- The time required for the obligee’s job training or education
- The marital standard of living
- The obligee’s age, physical condition, and emotional state
- The length of the marriage
- The ability of the obligor to pay
In some states, the obligor pays the obligee directly. The trend is to move to electronic bank transfer that the obligor arranges with the court or probation system, especially if the marriage was abusive or the divorce was especially acrimonious. Alimony can be paid weekly, bi-weekly, or monthly.
How Does Alimony Affect Taxes?
A law exacted by the Trump administration in late 2017 changed the federal tax treatment of alimony significantly. How alimony is treated by state income tax law varies state-to-state.
How Alimony Affects Federal Income Tax
Nationwide an alimony obligor used to be able to deduct alimony payments on a pre-tax basis. The obligee would then claim those alimony payments as income. Because the obligee is in a lower tax bracket than the obligor, the federal government received less in taxes on those funds than if the obligor claimed it.
The new federal law changed that by rendering alimony paid under any order or judgment entered after January 1, 2019 as not taxable to the obligee and not tax-deductible to the obligor. So, the federal government makes more.
The timing of the judgment of divorce matters, because if your judgment of divorce was entered by the end of 2018, any alimony ordered therein is taxed under the previous rule. If your judgment of divorce is entered on or after January 1, 2019, you must follow the new law. If you modified your alimony arrangement any time after January 1, 2019, the new law may apply.
How Alimony Affects State Income Tax
It depends where you live. Again, using New Jersey as an example, New Jersey still allows obligors to deduct alimony payments from income on their state tax return. Obligees must still report alimony as income received on their NJ state tax return.
This complicates both the parties’ tax returns and any negotiations by divorcing parties because the incentive for an obligor to settle on a (tax-deductible) amount of alimony has been reduced significantly.
How Long Does Alimony Last?
Again, this depends upon state law. Most court websites have information for divorcing couples about the procedure for divorce and the factors a judge considers when ruling on a property settlement agreements and support orders.
Using New Jersey as an example, the laws have changed to reflect changes in our society. On September 10, 2014, a statute was enacted that substantially changed the NJ alimony statute. N.J.S.A. 2A:34-23.
Permanent Alimony was Eliminated
“Permanent” alimony was replaced by “open durational” alimony for any marriage that is 20 years or more in duration. Absent “exceptional circumstances,” alimony will not exceed the length of the marriage if the marriage lasted less than 20 years.
- The ages of the parties at the time of the marriage and at the time of divorce;
- The degree one party is financially dependent upon the other;
- Whether one party has a chronic illness or other unusual health circumstance;
- Whether one party gave up a career to support the other;
- Whether one party has received a disproportionate share of the marital estate;
- The impact of the marriage on a party’s ability to become self-supporting;
- Tax considerations of both parties;
- Any other factors the court deems equitable, relevant, and material.
How To Avoid Paying Alimony
Divorce is a negotiation. To avoid paying alimony an obligor might want to grant the obligee jointly-owned property, such as the marital home. The obligor can also negotiate to pay more child support or to sign an agreement to pay all of the children’s college expenses or even the obligee’s education or training expenses.
An obligor can even agree to pay the obligee’s rent or mortgage or car payment in lieu of alimony. The parties and their attorneys can get creative, and as long as the judge believes it is fair, he or she will sign off on it.
Can A Working Spouse Receive Alimony?
Yes, if alimony is needed to maintain the marital lifestyle. This often happens when both spouses work, but one earns much more than the other.
States That Do Not Have Alimony
All states have alimony statutes and some form of alimony available, even if only rarely ordered. Most community property states do not allow permanent or temporary alimony but do allow rehabilitative alimony.
Why? Because community property laws provide that all assets and debts acquired during the marriage are owned equally by both parties. After the divorce, both parties are in the same financial situation, meaning that neither has more assets than the other to support the other.
Community property states include Arizona, California, Louisiana, Nevada, New Mexico, Texas, Washington, and Idaho.
My Spouse Refuses To Pay Alimony
The obligee must file a motion to enforce the support order. In many states, if the obligor refuses to appear at the hearing the judge will issue a warrant for his or her arrest.
Veronica Baxter is a legal assistant and blogger living and working in the great city of Philadelphia. She frequently works with David Offen, Esq., a busy Philadelphia bankruptcy lawyer.
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