Divorce is a significant life event that often brings with it a multitude of emotional and financial challenges. Among these challenges, spousal support — also known as alimony or spousal maintenance— can play a crucial role in shaping the post-divorce life for both spouses. It impacts immediate financial stability and sets the tone for long-term economic independence and well-being. Familiarizing yourself with eligibility and the factors determining spousal support can help you move through the divorce process as smoothly as possible. Who pays alimony in a divorce?
What Is Alimony Payment?
Alimony, or spousal support or maintenance, is a legal obligation for one spouse to provide financial support to the other spouse or former spouse after a separation or divorce. Alimony aims to mitigate any unfair economic effects of divorce by providing a continuing income to the non- or lower-wage-earning spouse. What are the types of alimony, and who pays alimony in a divorce?
Types of Alimony
There are several types of spousal support, and each serves different purposes for various periods. These types include:
- Temporary Alimony – This is awarded during the divorce proceedings to help the lower-earning spouse manage living expenses until the divorce is finalized.
- Permanent Alimony – Awarded in long-term marriages, permanent alimony continues indefinitely, often until the recipient remarries or either party dies.
- Limited Duration Alimony – This type of spousal support applies for a specific period, usually in cases where the marriage is of moderate length and the recipient needs support for a limited time to adjust to the post-divorce life.
- Reimbursement Alimony – This type of spousal support compensates a spouse who financially supports the other spouse through education or training, expecting future financial gains that didn’t materialize due to divorce.
- Rehabilitative Alimony – This type of alimony is short-term and aims to support the receiving spouse while they gain the necessary education or job skills to become self-supporting.
Determining Factors for Spousal Support in New Jersey
Determining who pays alimony in New Jersey is not automatic and involves a detailed analysis of various factors. The court considers the following elements:
- Earning Capacities – This includes assessing both spouses’ current and future earning capacities, including their educational background, job skills, and work experience.
- Standard of Living – The court seeks to maintain a standard of living reasonably comparable to that enjoyed during the marriage.
- Length of the Marriage – Longer marriages are more likely to result in alimony awards, particularly open-duration alimony.
- Parental Responsibilities – If one spouse is the children’s primary caretaker, this role can impact their ability to work and earn income, influencing alimony decisions.
- Need and Ability to Pay – The court examines the financial need of the spouse requesting alimony and the other spouse’s ability to pay.
- Contributions to the Marriage – Contributions can be financial or non-financial, such as homemaking and childcare. The court recognizes the value of a spouse’s contribution to the household.
- Age and Health – Spouses’ ages and physical and emotional health play a role in determining spousal support as they affect each spouse’s ability to work and earn income.
- Tax Consequences – The court evaluates the tax implications of alimony payments for both parties as they can impact each spouse’s net financial position.
How Much Tax Do I Pay on Alimony Received?
State and federal tax implications exist for paying and receiving spousal support in New Jersey tax laws. The Tax Cuts and Jobs Act (TCJA) of 2017 changed the federal tax guidelines for spousal support. After the change, they divide divorce agreements into two classes:
- Divorce Agreements Executed before January 1, 2019 – Alimony payments are deductible on the payer’s taxes and must be included as taxable income by the recipient.
- Divorce Agreements Executed after January 1, 2019 – Spousal support payments aren’t deductible for payers and do not count as taxable income for recipients. This recent change applies to new divorce agreements and modifications to existing agreements if the modification of spousal support explicitly states that the TCJA treatment of alimony applies.
Still, there are state tax implications under New Jersey law for spousal support, including:
- For Payers – You must deduct alimony payments made under a divorce or separation agreement on your state taxes.
- For Recipients – You must include spousal support payments you receive as taxable income. Additionally, taxes are not immediately deducted from received alimony payments. Also, you may need to increase your state taxes to prevent paying a potential penalty.
Contact a New Jersey Divorce Lawyer
Who pays alimony in a divorce? Going through a divorce can be emotionally draining and mentally exhausting, leaving you feeling alone, depressed, and isolated. At the Law Office of Andrew A. Bestafka, Esq., we understand that divorce is a deeply personal experience requiring sensitivity and understanding. Our firm can prioritize your well-being as much as your legal rights and hopes to offer compassionate guidance and legal support. Contact us online or call our Freehold divorce attorneys at (732) 898-2378 today.