Is Alimony Tax Deductible and Other Spousal Support FAQ
If you’re filing for divorce, you probably have questions about how your financial picture will look post-divorce. Here are important facts and answers to frequently asked questions about alimony.
The definition of alimony (spousal support)
Alimony is a term for money paid by one spouse to the other after divorce. It is intended to help the receiving spouse maintain the standard of living they had during the marriage.
The amount of alimony paid, and its duration, depend on a number of factors, including the couple's income and assets, the duration of the marriage, and the needs of the former spouse. A court also will consider whether the paying spouse has the financial resources to afford alimony payments.
What’s the difference between alimony and spousal support? Alimony is sometimes referred to as spousal support or spousal maintenance. The preferred term varies depending on your location. In any case, the higher-earning spouse may be required by court order to compensate the other spouse after divorce.
Types of alimony
Family law generally provides that alimony may be temporary or permanent. Temporary alimony may be awarded while the divorce is pending. It often ends when the divorce is final. Permanent alimony may be awarded after the divorce is final; it’s usually only awarded at the conclusion of long-term marriages. In many cases, it lasts until the receiving spouse dies or remarries.
Lump sum, rehabilitative, and durational alimony are forms of temporary alimony.
Lump sum alimony
This type of alimony is a one-time payment that covers a specific period of time.
This type of alimony helps the receiving spouse get back on their feet after a divorce. It usually lasts for a certain period of time and helps with things like housing, education, and job training.
This type of alimony lasts for a specific period of time. It's usually awarded when permanent alimony isn't appropriate, such as at the conclusion of a short-term marriage.
As mentioned, this type of alimony lasts until the receiving spouse dies or remarries. It's typically awarded at the conclusion of long-term marriages.
What's after divorce?
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FAQ about alimony
Can alimony amounts ever be changed?
Yes. Alimony payments are not static. They can change under certain circumstances. For example, if the recipient's financial situation worsens, they may be able to petition the court to increase alimony payments. The same is true if the payor’s financial situation worsens. They may be able to petition for a change in the amount they pay, or the payments may even be terminated.
Is alimony tax-deductible to the paying spouse?
No. The IRS no longer considers alimony to be earned income for the person receiving the payments. Thus, it cannot be claimed by either party as a tax deduction on income tax forms. This rule took effect in 2019.
Is alimony considered earned income?
No. Alimony is not considered to be earned income for the person receiving the payments. Thus, if you receive alimony as part of your divorce agreement, you do not have to pay taxes on it. This rule also took effect in 2019.
At Hello Divorce, we understand that the divorce process can be overwhelming – and financial concerns can weigh heavily on people who are already in a difficult spot emotionally. That’s why we’re here.
Visit our services page to learn about the helpful tools we offer, including flat-rate sessions with a certified divorce financial analyst. Or, schedule a free one-to-one phone call with an account coordinator to ask your questions.