How alimony is determined.
Unlike child support, which in most states is mandated according to very specific monetary guidelines, courts have broad discretion in determining whether to award alimony and, if so, how much and for how long.
The Uniform Marriage and Divorce Act, on which many states' spousal support statutes are based, recommends that courts consider the following factors in making decisions about alimony awards:
- The age, physical condition, emotional state, and financial condition of the former spouses;
- The length of time the recipient would need for education or training to become self-sufficient;
- The couple's standard of living during the marriage;
- The length of the marriage; and
- The ability of the payer spouse to support the recipient and still support himself or herself.
Alimony and Support Orders.
Although awards may be hard to estimate, whether the payer spouse will comply with a support order is even harder to gauge.
Alimony enforcement is not like child-support enforcement, which has the "teeth" of wage garnishment, liens, and other enforcement mechanisms. The recipient could, however, return to court in a contempt proceeding to force payment.
How long alimony must be paid.
Alimony is often deemed "rehabilitative," that is, ordered for only so long as is necessary for the recipient spouse to receive training and become self-supporting. If the divorce decree does not specify a spousal support termination date, the payments must continue until the court orders otherwise.
Most awards end if the recipient remarries. Termination upon the payer's death is not necessarily automatic; in cases in which the recipient spouse is unlikely to obtain gainful employment, due perhaps to age or health considerations, the court may order that further support be provided from the payer's estate or life insurance proceeds.
Alimony Trends.
In the past, most alimony awards provided for payments to former wives by breadwinning former husbands. As the culture has changed, so that now most marriages include two wage earners, women are viewed as less dependent, and men are more likely to be primary parents, the courts and spousal support awards have kept pace.
More and more, the tradition of men paying and women receiving spousal support is being eroded, and orders of alimony payments from ex-wife to ex-husband are on the rise.1
Tax aspects of Alimony.
Alimony usually is treated as income to the recipient and a deduction from income to the person paying alimony. This can result in a savings in the combined income tax payments of the husband and wife. The reason for the savings is that additional income to the wife (in the form of alimony) will be taxed at a lower rate than if it was treated as income to the husband.
Assume a husband and wife are about to be divorced. Before payment of alimony, the wife has a taxable income of $10,000 and the husband has a taxable income of $70,000. If they each were to pay taxes on these amounts, their combined tax liability would be $17,991. (The husband would pay $16,487; the wife would pay $1,504, applying the 1999 federal tax tables).
If the husband were to pay the wife $20,000 per year in alimony, his taxable income would drop to $50,000, and the wife's taxable income would increase to $30,000. Their combined federal income tax payments then would be $15,720 ($10,660 by husband and $5,060 by wife). The savings on their combined tax bills would be $2,271 over what would be paid if the alimony payments were taxable to the husband.
The wife's tax bills have gone up, but so has her income.2
Taxes: Alimony paid and received.
You may deduct the alimony or separate maintenance payments you are required to make to your spouse or former spouse, or to a third party on behalf of that spouse.
This topic covers alimony under divorce or separate maintenance decrees or written separation agreements entered into by you and your spouse or former spouse after 1984. It explains what is deductible if you pay alimony, and what is taxable if you receive alimony.
Alimony payments you make under a divorce or separation instrument, such as a divorce decree or a written agreement incident thereto, are deductible if all of the following requirements are met:
- You and your spouse or former spouse do not file a joint return with each other,
- You pay in cash (including checks or money orders),
- The divorce or separation instrument does not say that the payment is not alimony,
- If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment,
- You have no liability to make any payment (in cash or property) after the death of your spouse or former spouse; and
- Your payment is not treated as child support.
Child support is never deductible. If your divorce decree or other written instrument or agreement calls for alimony and child support, and you pay less than the total required, the payments apply first to child support. Any remaining amount is then considered alimony.
Property settlements, whether in a lump sum or installments, even though required by the divorce decree or other written instrument or agreement, do not qualify as alimony. Any payments not required by such a decree or agreement do not qualify as alimony.
You do not have to itemize deductions to claim your alimony payments. You may claim the deduction on line 34a of Form 1040. You must provide the social security number of the spouse or former spouse receiving the payments. If you don't, you may have to pay a $50 penalty and your deduction may be disallowed.
If you are the spouse or former spouse who is receiving the alimony, you must report the full amount as income on line 11 of Form 1040. If you do not give your social security number to your spouse or former spouse who is making the alimony payments, you may have to pay a $50 penalty.3
1Copyright © 2007 FindLaw
2Guide to Family Law
Copyright © 1996, 2000 American Bar Association
3Internal Revenue Service