Petroff Law Offices
What Is Alimony/Spousal Support? Things You Should Know Before Filing For Divorce
Divorce proceedings may involve untangling and dividing financial assets between both partners. In some marriages, one partner may earn considerably more than the other, as the couple may have undertaken different roles within the family unit. In such cases, there is a possibility that the court will award alimony, or spousal support as it is called in many states, to the lesser-earning or non-earning spouse when they physically separate.
If you are considering going through a divorce, then understanding the concept of alimony can help guide your decision making process.
Read the following MomJunction post to know about alimony, the payment rules, duration, and much more.
What Is Alimony?
Once the divorce is finalized, or temporary orders are issued during the pendency of a divorce, one spouse may be required to pay spousal support to the other spouse for a specified period. This amount is paid either during the divorce in the form of temporary orders or at the conclusion of the divorce a divorce is known as alimony.
These payments are meant to support the lesser- or non-earning spouse and help them become financially independent. In other words, the amount helps the receiving spouse to maintain a similar lifestyle that they were used to during the marriage and used to launch the other into their new life.
In some cases, temporary alimony or pendente lite alimony may be paid to the spouse until the divorce is finalized. Once the divorce is finalized, alimony may or may not be awarded. If awarded, that alimony need not be the same as the temporary alimony; it can be higher or lower than that.
The amount of alimony is not fixed but depends on various factors that we will discuss in detail later in the post. Generally, it is a percentage of the spouse’s monthly earnings. Not all divorces qualify for alimony.
Alimony Laws In The US
There is no federal law regarding alimony. Each state has its own divorce laws, including laws on deciding about alimony payments.
However, alimony is not automatically granted. You need to ask for it during the divorce proceedings. There can be two instances here.
1. Both spouses agree on spousal support
Alimony or spousal support is a separate and distinct part of the divorce case and not typically included in the part of the division of all assets or property. Typically spouses agree on the split of their fixed assets such as retirement benefits, bank accounts, and equity in real estate and then move on to the alimony discussion. It is a common mistake for folks to conflate or combine these two concepts.
In this case, when both spouses reach an agreement on alimony payments, they can request the judge to include this agreement in the court order.
2. Spouses do not agree on spousal support
In this case, the judge decides on whether one of the partners is entitled to alimony. The judge will then consider the following factors.
Length of the marriage
Behavior or conduct of the partners during the marriage
Employment status, education, job skills, or work experience of the partners
Division of property or assets between the spouses and whether any liquid assets (cash) are involved
Age of both the partners (relevant especially in older couples)
Ability of one of the partners to pay spousal support
Current living situation of the spouses
Current or future needs of each spouse
Health of both the partners
Living standard of both parties during the marriage
Presence of other people who receive support from either of the spouses
Financial contribution (joint estate) of each spouse during the marriage
Fairness (i.e., inheritance)
If other people stay or live with either of the spouses that can affect the financial situation
Educational experience or prospects of the parties
When Is Alimony Granted?
During divorce proceedings, both spouses may agree on the alimony amount and duration. In cases where the spouses are not able to reach a consensus, the court may intervene—one spouse may request alimony during the court proceedings, and the judge may consider the request to determine whether it is required or not.
Over the years, alimony payments have become less common, as in most cases, both spouses have almost equal-paying jobs.
However, in some relationships, spouses may take different roles—one spouse may stay at home to take care of the children, while the other may work to handle the domestic finances. In such a case, the judge may ask the earning spouse to pay the alimony.
Similarly, consider a case where one spouse (say the husband) paid for the higher education of the other spouse (wife), hoping that they would benefit from this investment in the long run. However, the marriage did not last long to let the couple enjoy monetary benefits. In that scenario, the judge may ask the wife to pay alimony to her former spouse in the form of reimbursement.
Usually, alimonies are not granted in short marriages or when both spouses earn near-to-equal amounts.
When Does Alimony Begin?
Alimony payments (monthly basis) usually start from the date the judge issues the court order granting the alimony. However, the judge holds the right to grant retroactive alimony (award of support for a period before the filing of an application or petition to the court) from the date a spouse filed the petition.
In some cases, the court may order a spouse to pay “lump sum” alimony or spousal support all at once. In other cases, payments can be made on a monthly or yearly (“periodic”) basis. This depends on how the higher wage earner is paid (quarterly bonuses, commission checks, etc.).
How Long Does Alimony Last?
Depending on the circumstances of the divorce, the length of time for alimony payments may vary from months to years.
A judge may review these payments after a specific period if circumstances have changed, or there are new facts to consider. The review may vary depending on the judge or specific events. The judge may also determine whether the former spouse receiving the payments has become financially independent or self-sufficient.
Periodic support or alimony can be short-term (temporary) or permanent.
Permanent alimony is usually granted in certain situations like when the spouse receiving the alimony is older than 60 years and has little or no education, job skills, or income.
However, these payments may end under the following circumstances.
Death of either partner
Remarriage of the former spouse receiving the alimony. Alimony does not end after remarriage until the former spouse seeks a court’s intervention to end it.
Children do not need a full-time parent at home.
A fixed or specific amount has already been paid to the former spouse.
A judge decides (after a specific period) that the former spouse receiving the payments has made little or no effort to become financially independent or self-sufficient.
Retirement; when former spouses share pension and other retirement benefits
Disability of the higher wage earner
Layoff of the higher wage earner through no fault of his or her own.
What Determines Alimony Payment Amounts?
A judge may consider state law and various factors while determining the amount of alimony payments. These could include
Income or employment status of both partners
Living expenses of each spouse
Need of the spouse receiving the alimony
Ability of the spouse to pay the alimony
Division of assets during divorce proceedings
Length of the marriage
Age and health of each spouse
In addition, there are chances to modify alimony payments in instances where
the spouse paying the alimony loses the job or incurs financial losses.
the spouse receiving the payment feels that the cost of living has increased considerably following the court order.
Difference Between Alimony And Child Support
The main difference between alimony and child support lies in the intent. Spousal support or alimony is granted to benefit the spouse, while child support is paid to help the child after the parents’ divorce.
Child support is granted to meet the needs of the child or children. These needs could include education, food, clothing, housing, and so on.
Tax Laws On Alimony
In terms of taxes, the rules may vary depending on whether you are paying or receiving the alimony (1).
If the divorce was finalized before December 31, 2018, and you paid alimony or separate maintenance to your spouse or former spouse, then that amount is considered tax-deductible. You may deduct that alimony amount from your taxable income.
If you are the one receiving the taxable alimony, then you must include the amount of alimony or separate maintenance you received as income. You should report the amount received on Form 1040 or Form 1040-SR (for seniors), using Schedule 1 or Schedule NEC; otherwise, you may face a penalty.
Tax Rules For Child Support
Since child support is meant to help the child, the payments are neither deductible by the payer nor taxable to the receiving party. Therefore, there are no requirements for reporting those (2).
Handling financial situations during divorce proceedings can be tricky. If spousal or child support is involved, the couple may have to either reach a mutual agreement or seek legal recourse to resolve the issues.
Have any useful insights to share on managing finances during divorce proceedings? Feel free to share them in the comments section below.
Reviewed by Ronald R. Petroff (Family Attorney)
Written by Medha Singh (MS, Biomedical Engineering)
April 29, 2020
Topic No. 452 Alimony and Separate Maintenance: Internal Revenue Service
Dependents 6. Frequently Asked Questions: Internal Revenue Service