Who Pays Taxes on Alimony in Washington?

• How does alimony work in Washington?
• Are there different types of alimony?
• How can alimony payments be terminated?
• Are alimony payments considered taxable income in Washington?
• References

Whether you will need to pay taxes regarding alimony, or spousal support, in Washington state will depend on when you got divorced. Broadly, any divorce or separation that was finalized before the first of January 2019 is bound by older rules. Under those older rules, paid alimony is tax deductible, and received alimony counts as receiving taxable income. 

Notably, This isn’t true for a divorce or separation that is finalized after the aforementioned date.

How does alimony work in Washington?

In the state of Washington, a judge will determine alimony payments based on the guidelines they are legally obligated to consider. The factors most likely to impact alimony orders (also called maintenance orders) are as follows:

• The financial situation of the person seeking alimony
• The time needed for the person seeking alimony to find appropriate employment
• The time needed for the person seeking alimony to acquire adequate education or training to seek appropriate employment
• The normal lifestyle established during the partnership
• The length of the partnership 
• The age, physical state, emotional state, and financial responsibilities of the person seeking alimony
• The potential payor’s ability to afford the payments

The party seeking alimony or maintenance can be of any sex. If alimony is ordered, it will be paid by the spouse who served as the primary source of income during the partnership.

Are there different types of alimony?

Broadly speaking, there are two types of alimony that may be awarded in Washington: temporary maintenance and permanent maintenance. 

Temporary maintenance

Temporary maintenance, as the name implies, is a form of maintenance payment that is intended to end. It may continue only until a divorce is finalized; after that, a final judgment can be made on what is most appropriate. 

In other cases, payments may last until the receiving party is reasonably trained and employed. The specifics will always depend on the exact order a judge delivered.

Permanent maintenance

In some cases, permanent maintenance (also called permanent alimony) may be ordered. This may be done when the earning disparity between the two parties is likely to be persistent and substantial. For example, if the receiving party has significant health issues that make it unlikely for them to hold a long-term job, a judge may deem permanent alimony appropriate. 

Can the type of alimony be changed?

Even if permanent maintenance has been ordered, it may be possible to modify or terminate a decree for maintenance or support. However, the circumstances under which this can be done are limited. 

A common misconception is that being unemployed or underemployed can lower your payment obligations. This is only partially true. You generally need to prove there has been a substantial change in circumstances outside of your control if you want to have a payment obligation modified. 

The law states, “[t]he voluntary unemployment or voluntary underemployment of the person required to pay support, by itself, is not a substantial change of circumstances.” In other words, a surprise firing could allow you to get your payment obligation lowered, but quitting or intentionally staying underemployed would not.

How can alimony payments be terminated?

The most common reasons decrees for maintenance or support are terminated, meaning a person no longer needs to pay the other party, are as follows:

• The receiving party dies.
• The receiving party remarries.
• The receiving party finds suitable long-term employment.

Are alimony payments considered taxable income in Washington?

Prior to 2019, paying alimony would be considered tax-deductible, and receiving alimony would have been considered taxable income in Washington state. However, the law has since grown in complexity. A person must now consider whether their divorce orders were finalized before or after December 31, 2018.

This is because of the  Tax Cuts and Jobs Act of 2017 (the TCJA). With the relevant sections taking effect on January 1, 2019, this law made it so divorces and separations finalized before the start date of the act were grandfathered in, binding the parties by the old rules. Similarly, any divorce or separation finalized after the start date must follow the new rules. 

Because of this law, alimony payments are no longer tax deductible for payors. Further, recipients of alimony do not have to report alimony as income.

References