Alimony payment is a court-authorized payment issued by an individual to their spouse or ex-spouse following a divorce or separation. Fines and penalties can apply if the paying spouse does not pay spousal support, despite having the financial means to do so.
Whether you are paying alimony or receiving it, there are many nuances surrounding alimony payments. Keep reading to learn how it works, the different types, and the requirements.
Definition and Example of an Alimony Payment
After the dissolution of a marriage, one of the ex-spouses—called the dependent spouse—may be entitled to alimony payments from the supporting spouse. Alimony is typically available to individuals who were financially dependent on their ex-partner during the marriage and need financial support following the divorce or separation.
- Alternate names: Partner support; spousal support; maintenance payments
For example, let’s say Joseph and Fiona are filing for divorce after a ten-year marriage. Joseph worked full-time and Fiona was a stay-at-home mom. Fiona requested an award of alimony because she made no income and was reliant on Joseph financially. The court considers each party’s contribution and sacrifice equitably and approves Fiona’s request for alimony. A judgment is made that Fiona is entitled to monthly alimony payments from Joseph after the divorce.
For tax purposes, not all payments issued following a divorce are considered alimony payments. Child support, mortgage payments, and noncash property settlements, for example, would not be considered alimony.
How Do Alimony Payments Work?
The court approves alimony payments for those who fall under the definition of “dependent spouse.” A dependent spouse (sometimes called a “supporting spouse”) is somebody who was financially dependent on their spouse during the marriage. Following the dissolution of the marriage, the dependent spouse needs regular support from their ex-spouse in the form of alimony payments.
There is no universal law defining the amount or term for alimony payments an individual is entitled to. Guidelines are typically left to the judge’s discretion and can vary by state and court. Generally, a judge will consider:
- Length of the marriage
- Contributions made by each party during the marriage
- Marital misconduct (e.g., infidelity, cruel treatment, abandonment, domestic violence)
- Personal behaviors (e.g., alcohol and drug abuse, financial misconduct)
- Age and health of each party
- Current debts
- Marketable skills of each party (and current market demand for those skills)
Alimony is paid out on a predetermined schedule, usually monthly. The parties may also agree to lump-sum alimony, in which alimony is paid out in a single lump sum. In some cases, the judge may approve rehabilitative alimony—a type of alimony with limited duration, during which the dependent spouse gains enough education, training, or skills to be self-sufficient.
Spousal support typically stays in effect until the court has ruled it to end, or if the dependent spouse remarries or enters into a new domestic partnership, or when other conditions set by the alimony contract are met.
Permanent alimony, meaning the supporting spouse must make payments to the dependent spouse until one of them dies, has fallen out of favor over time, and only enforced in a handful of states.
Consequences for Missing Alimony Payments
If you fall behind in your alimony payments, interest, penalties, and even incarceration can apply.
In California, for example, the law requires that 10% interest be applied per year the balance is due. The court may order your wages garnished to ensure alimony is being paid. In more severe cases, the judge can hold you in contempt of the court for willfully refusing to pay alimony despite having the financial means, resulting in jail time.
Alimony Payments and Taxes
The Tax Cuts and Jobs Act of 2017 changed the tax implications when reporting alimony, and is based on when your divorce or separation agreement was signed.
- If you signed before 2018: Alimony payments are tax-deductible for the payer spouse, but considered taxable income for the recipient spouse.
- If you signed after 2018: Alimony payments are NOT tax-deductible for the payer spouse and are not considered taxable income for the recipient spouse.
Criticism of Alimony Payments
Although there is agreement of the necessity of alimony, some dispute the scope of earnings the dependent spouse is entitled to. Some believe that wages and assets accumulated during the marriage should be divided fairly, but this should not apply to earnings received after the divorce. The argument is that it is the earner who dedicated time and labor to increase their earning capacity—thus, they should be entitled to the full fruits of their labor after the divorce.
Others argue that alimony laws fail to consider the equitable contributions a non-working spouse made during the marriage, such as raising children or keeping house, which limited their income-earning potential for years to come. Traditional gender roles often play a role in the debate.
Requirements for Alimony Payments
Although spousal support may be privately agreed upon, a signed court order is required for it to become legally enforceable. While the process can vary by the court, many districts agree on similar guidance for the process, such as taking the following steps:
- Agree with your spouse on the amount and duration of the alimony payments. Also, discuss how the wage payments would be issued and if wage garnishment would be necessary.
- Finalize the agreement in writing, also called a spousal or partner support agreement. Each party should sign and date the agreement.
- Turn in your agreement to the court. The judge will sign it and you will file it with the court clerk.
- If you agreed to wage garnishment, you would need to submit additional documentation to the paying spouse’s employer.
- Alimony payment is made from one former spouse to the other to provide financial support following a divorce or separation.
- For alimony payments to be legally binding, both spouses must obtain a court order or judgment signed by a judge.
- For separation agreements signed after January 1, 2019, alimony is no longer considered part of the dependent spouse’s gross income.
- Failure to make good on alimony payments can result in penalties, fines, and even incarceration.