What is alimony?
September 26, 2023 6 min read
Divorce can be one of life’s biggest emotional and financial stresses. When you take lawyer expenses, filing fees and court costs into account, the costs of divorce can quickly add up. And in some cases, you’ll also need to consider any costs you’ll pay going forward. These costs may include alimony, which is financial support that someone may be required to pay their ex-spouse.
Read on to learn more about how alimony works, whether it’s tax-deductible and how it’s calculated.
- Alimony is designed to financially support a former spouse who may have had a lower income during the marriage.
- The size and duration of alimony payments depend on many factors. Some of these factors include income, the length of the marriage and contributions each partner made during the marriage.
- The formula for calculating alimony payments varies in each state and locality. It’s usually based on a percentage of the difference in incomes.
Alimony, or spousal support, is financial assistance someone may need to give their former spouse during a legal separation or after a divorce. These court-ordered payments are designed to help a lower-earning spouse adjust to their new financial situation or sustain a standard of living they had during marriage. Alimony may either be temporary or permanent, depending on the length of the marriage and a few other factors.
Alimony vs. child support
Alimony and child support are two types of financial support that a court may order someone to pay. Both are based on income and financial need. The main difference between alimony and child support is how the payments are supposed to be used. Alimony payments are designed to financially support an ex-spouse. Child support should cover a child’s expenses, such as food, clothing, housing and medical care—regardless of the parents’ marital status.
How does alimony work?
In a divorce proceeding, one or both spouses can request alimony payments. A judge reviews those requests and may award alimony payments to one spouse. The recipient spouse must show they need financial support, while the payor spouse must have the ability to pay it.
The amount and terms of the alimony payments depend on factors like the length of the marriage and what each spouse contributed to the union. A judge may also consider marital misconduct, such as adultery or domestic violence. If alimony payments are addressed in a divorce case, the details will be documented in the divorce or separation agreement. After the divorce is finalized, the former spouses may still request alimony payments or adjust them through a process called a modification.
When it’s time to start alimony payments, the payor spouse may be required to make them in a lump sum or in regular installment payments, such as monthly or weekly. Generally, a longer marriage is more likely to result in longer-term alimony payments.
Is alimony taxable?
The person who receives alimony won’t need to report the payments as taxable income on their federal tax return. It’s a good idea to check state laws for guidance on the local level.
Is alimony tax-deductible?
As of 2019, spouses who pay alimony can’t write off those payments on their federal income tax returns. If someone divorced before 2019, their agreement may have been modified to address tax deductions. On the local level, each state can decide whether payor spouses may deduct alimony on their state income tax returns.
Types of alimony
There are several types of alimony payments, and they’re based on factors like the length of the marriage and how long the payments will last:
Temporary alimony, sometimes known as “pendente lite,” is temporary support that’s paid during a divorce proceeding or legal separation. It ends when the divorce is finalized through a court decree. The judge may order the payor spouse to pay another type of alimony at this point.
Permanent alimony provides regular payments to the recipient spouse until that spouse remarries or either spouse dies. This type of alimony is more commonly awarded to spouses in long-term marriages. However, the definition of “long term” may vary in each state.
Rehabilitative, or “time-limited,” alimony is intended to support an ex-spouse while they receive education or job training. The alimony ends when the recipient spouse achieves financial independence.
Reimbursement alimony can be awarded when a marriage lasts less than five years. It’s intended to financially support a spouse who contributed significantly to the income of the other spouse. For example, a spouse may be awarded reimbursement alimony if they paid for their partner’s higher education so that the partner could secure a job.
Transitional alimony helps the recipient spouse transition into a new lifestyle or location as a result of the divorce. This type of alimony is temporary and can be awarded if a marriage lasts less than five years.
Separate maintenance alimony
A judge may award this type of financial assistance when a couple legally separates. It’s meant to help the lower-earning spouse become financially independent.
How to calculate alimony payments
If you and your spouse are considering a divorce, you may be wondering: What is alimony based on? Judges may look at several factors to calculate the size of the alimony payments and how long a spouse receives them.
Some of the factors include:
- Each partner’s earnings and employability
- Lost economic opportunities because of the marriage
- Contributions each partner made during the marriage
- How long the marriage lasted
- Marital misconduct, such as domestic violence, adultery or financial abuse
- Personal behaviors, such as alcohol and drug abuse
- Age and health of each partner
- Other factors the judge considers relevant
The size of the alimony payments is usually based on income, but the formula is different in each state and locality. It may help to look at one example of how alimony is calculated:
Let’s say Brian earns $5,000 a month and Mary earns $9,000 a month. The couple lives in Massachusetts, where alimony payments can’t exceed 30% to 35% of the difference between the partners’ gross incomes.
Subtract the smaller income from the larger income to find the difference between the partners’ gross incomes:
$9,000 – $5,000 = $4,000
Multiply the difference by 30% and 35% to find the lower and upper limits of alimony payments:
$4,000 x 0.30 = $1,200
$4,000 x 0.35 = $1,400
In this example, Brian may be entitled to receive between $1,200 and $1,400 from Mary each month.
To figure out how long the alimony payments will last, the judge typically looks at the length of the marriage. This formula varies by state, too.
For instance, let’s say Brian and Mary were married for exactly four years in Massachusetts. In this scenario, Brian may receive payments for 24 months, which is 50% of the number of months he was married.
Alimony in a nutshell
Alimony is designed to financially support a former spouse who may have had a lower income during the marriage. And like lawyer expenses, filing fees and court costs, it’s just one of the potential costs of divorce.
While divorce can be a difficult experience, the financial aspects of it don’t always have to be. Check out Capital One’s guide to managing money during a divorce.