Types of Alimony and Spousal Support
There are times after a divorce that one party needs continuing economic support from the other. The amount paid by one party and received by the other one is referred to as alimony. This is often a contentious issue with one party seeking support and the other one working hard to avoid paying it. At Infinity Law Group, we do our best to guide our clients through the entire divorce process in the most amicable way possible, always keeping in mind their personal needs, overall best interest and legal requirements.
Current Massachusetts law went into effect in March 2012. Under the law, there are different types of alimony depending on the needs of the recipient. All types may be paid by periodic payments or in a lump sum depending on the terms of the court order. All types terminate upon remarriage of the receiving party or upon the death of either spouse. The court may order the paying spouse to provide life insurance or some type of security that will fulfill his or her alimony obligations in event of the death of the paying spouse. There are different purposes for each type and different rules that apply.
Types of Alimony
This is paid for a period of time to assist a spouse in obtaining retraining or education in order to become self-sufficient. It terminates after a period of time decided upon by the judge, but is designed to last for no longer than five years after the date of the divorce. The law does allow for an extension of time upon a showing of compelling circumstances, such as:
- The recipient spouse was prevented from becoming self-sufficient due to unforeseen circumstances.
- The recipient spouse tried to become self-sufficient.
- The paying party will not suffer any undue burden if ordered to continue making payments.
This is paid to one spouse after a marriage of not more than five years in order to reimburse the receiving spouse for either economic or noneconomic contributions he or she made to furthering the professional career of the paying spouse. This includes enabling the spouse to complete education or job training. The income guidelines for other types of alimony do not apply to reimbursement alimony. Once reimbursement alimony is ordered, it cannot be modified.
This is payment to help a spouse to transition to “an adjusted lifestyle or location as a result of the divorce.” This applies only to marriages that did not last more than five years and cannot be paid for more than three years after the date of the divorce. It cannot be extended nor can it be replaced with another form of alimony.
General Term Alimony
General term alimony is paid to a spouse who is economically dependent. It terminates on remarriage of the receiving party or upon the death of either spouse. It also terminates when the receiving spouse maintains a common household with another person for at least three continuous months.
Factors Considered in Determining Type of Alimony, Amount, and Duration
Not every spouse that requests alimony is entitled to receive it. The final decision is up to the family law judge, who considers many factors in determining whether one spouse qualifies to receive alimony and, if so, the type, amount and duration of payments. Some of the factors include:
- The length of the marriage.
- The age and health of each party.
- The overall financial situation of each party including income, employment and employment opportunities for each party.
- Contributions of each party to the marriage including both economic and noneconomic ones.
- Lifestyle enjoyed by the couple during their marriage.
- The ability of both parties to maintain that lifestyle after the divorce.
- Any lost opportunity for education or job advancement by one party due to that party’s contribution to the marriage.
- Any other factor the court deems relevant.
The court may deviate from any guidelines relevant to general term or rehabilitative alimony if, according to the law, it makes written findings as to why deviation is necessary.
How Does the IRS Treat Alimony for Tax Purposes?
Generally speaking, alimony or spousal support is tax deductible to the payor and taxable income to the payee. Child support, on the other hand, is not tax deductible to the payor and is not taxable income to the payee.
When Is Something Considered Alimony?
It must meet the following criteria:
- Payment must be made in cash
- Payment must be made pursuant to a divorce judgment or separation agreement and payment must be made or received by or on behalf of a spouse
- The parties must live separately
- Payment must end upon the death of the payee
Recapture is looked at by the IRS to prevent parties from front loading their alimony payments to disguise it as a property division. Recapture only is considered when the total alimony from year to year is more than $15,000. Moreover, recapture is looked at by the IRS during the 3 years following a divorce. If alimony payment decreases by more than $15,000 in the three post-divorce years, then the IRS can come in and recapture the deduction of alimony from gross income.
There might also be situations when the payee might not want to be taxed on alimony payments and the payor agrees that they will not take a deduction on the alimony paid. In that situation, there can be an explicit agreement that the parties can enter into to prevent the payee from paying taxes on the alimony and also prevent the payor from taking a tax deduction on it. In the eyes of the IRS, all due taxes are being paid between both parties, so they allow such an agreement.
If you’re considering alimony provisions as part of your divorce, ask your attorney about possible tax ramifications before the final divorce judgment is entered.
Modifying Alimony and Child Support
In order to file for a Modification of a child support or possibly alimony, you need to first show that there is a difference between the amount you’re paying or receiving vs. what you should be paying or receiving. Knowing that requires that you have access to your own salary and income information in addition to having the information from the other party. How do you do that?
In short, it’s difficult but if you think ahead, there are steps you can take to make it easier.
Without an open court case, you cannot subpoena or request salary and income information from the other party. That means that before you file for your Modification case, you already need to know the approximate numbers. You cannot go into their tax returns because you’re not the Department of Revenue or the IRS. Many times, how people find out is by accident. Maybe you’re speaking with that person and they casually mention that they got a raise or a promotion at work and their schedule needs to change. Or they’ll mention that they need to go on a business trip and you know that their job never required business trips before. You might hear it from your child that daddy or mommy got a new job. You might still be friends with your ex on Facebook or LinkedIn.
These and many other ways to get the information through the grapevine is usually how this information is initially found out. However, if you’re in the middle of a divorce or a child support case, you might want to ask your attorney for mechanisms to put into place so that there would be automatic exchanges of tax returns the W2s in the future so that you don’t have to be a spy in order to get the information. This can be written into a Separation Agreement or a settlement on child support issues.
Why You Need an Attorney
Whether you are seeking alimony or are being asked to pay it, there are many other factors for consideration. For example, when the paying party retires, whether on time or by taking early retirement, may affect the terms of the payments. The termination dates of general alimony orders vary depending on the length of the marriage. Some orders can be modified, others cannot be. For marriages that lasted 20 years or more, an alimony order may be for an indefinite length of time. There are many other nuances to Massachusetts law affecting whether you will be required to pay or be qualified to receive alimony.
Our firm can assist you. We offer a free phone consultation, where you can discuss your situation with a lawyer. We will help you decide what your next steps should be. Contact us now to get started.