Alimony can make a significant difference in a divorcee’s lifestyle. For those owed alimony, it helps you maintain your standard of living. For those who pay alimony, it’s important to understand the “why” behind it and how it could affect your income.
So, what exactly is alimony and how does it work?
What is alimony?
Alimony — also known as spousal support or spousal maintenance — is money one spouse pays the other in a divorce.1
Types of alimony
There are five primary types of alimony, each with a different purpose.2
- Temporary alimony: This type of spousal maintenance only lasts for the duration of the divorce proceedings.3
- Permanent alimony: This type of spousal support lasts until the death of either spouse or until the payee gets remarried.
- Reimbursement alimony: This type of alimony is for spouses who made significant sacrifices to advance the other spouse’s life. This can include paying for the spouse’s education or giving up a career to be at home.
- Rehabilitative alimony: This type of temporary spousal maintenance helps the lower-earning spouse get on their feet. The length of rehabilitative alimony depends on a few factors, but it often lasts until they find a stable job.
- Lump-sum alimony: This type of spousal maintenance happens when one spouse gives the other money instead of property or items during the settlement.
How does alimony work?
Court-ordered alimony payment amounts are predetermined and can be weekly, bi-weekly, or monthly, depending on the agreement.
Let’s take a look at how alimony can work when other factors come into play, like prenuptial agreements, child support, and getting remarried.
Alimony and prenup
Prenuptial agreements can help protect the lower-earning spouse by guaranteeing them a certain amount of alimony. This often depends on the length of the marriage, circumstances of the divorce, and what the couple agrees to. A prenup defines alimony expectations, so it’s not up to the judges or external factors.
Alimony and child support
Alimony and child support both fill different needs. Alimony payments cover a spouse’s needs, while child support payments cover a child’s needs.1 Divorced parents with child custody may receive both spousal and child support.
Alimony and remarriage
Some alimony agreements have a remarriage stop built into them that state if the lower-earning spouse gets remarried, they’ll stop receiving spousal support.1
Who gets alimony?
Whether you’re considering filing for divorce or already in the midst of it, you may have to think about alimony. Spousal support is designed to help both spouses live the same quality of life post-divorce as they did during their marriage. If one spouse is at a significant financial disadvantage, then the other spouse will likely have to pay alimony.
Oftentimes, one spouse makes sacrifices for the other’s career or academic pursuits. The sacrificing spouse may receive alimony payments in the divorce. Ultimately, it comes down to who’s at a financial disadvantage in the divorce.2
How is alimony calculated?
You may wonder, “what is alimony based on?” There are many tables and calculators to help determine how much support one spouse owes the other. However, these generate averages, whereas the actual amount of spousal maintenance is specific to each couple and the financial support they need. Courts may use a combination of factors, including:4
- Both spouses’ income, assets, and debts
- Both spouses’ earning potential
- Both spouses’ standards of living
- The length of the marriage
- Any limiting factors (illness, child care, etc.)
How long does alimony last?
Courts determine the length of alimony by looking at factors like the duration of the marriage. Long marriages often demand maintaining alimony for the length of the marriage or for life. Of course, the exact number of years depends on the circumstances of the divorce.
Is alimony taxable?
If you finalized your divorce by December 31, 2018, then your payments may be eligible for a tax deduction. The receiving spouse must report the amount as a stream of income and pay taxes on it.4
Meanwhile, alimony for divorces finalized as of 2019 and beyond aren’t taxable. The payee can’t claim a deduction, and the recipient doesn’t pay taxes on it. Since it’s not counted as income for either party, it’s pre-tax.4
Alimony legal counsel
While the meaning of alimony is straightforward, the amount, period of time, and details can be hazy. There are many factors to consider when setting spousal maintenance in the divorce process. Ultimately, courts determine spousal support on a case-by-case basis. A divorce attorney can help you determine how your specific circumstances may affect what alimony looks like.