What Is Alimony?

Alimony refers to court-ordered payments awarded to a spouse or former spouse within a separation or divorce agreement. The reason behind it is to provide financial support to the spouse who makes a lower income, or in some cases, no income at all.

Alimony can be awarded to a husband or wife; however, in cases when there are children involved, the man has historically been the breadwinner, and the woman may have given up a career to raise the kids and will be at a financial disadvantage. A divorced spouse often has the right to live the same quality of life he or she had when married.

Key Takeaways

  • Alimony refers to a periodic pre-determined sum awarded to a spouse or former spouse following a separation or divorce.
  • The goal of alimony is to provide spousal support in order that they continue the lifestyle to which they are accustomed to after divorce.
  • Alimony will often be awarded to ex-spouses of long term marriages (i.e. greater than 10 years) and will stop upon death, remarriage, or court order.

Understanding Alimony

How much and how long a spouse must pay alimony depends upon how long the marriage lasted and current and future potential incomes for both spouses. Many factors differ state-to-state; however, if a couple separates or divorces after 10 years, alimony is almost always awarded unless both spouses have the same earning power. If not, the lower-earning spouse will likely receive alimony payments, which may be perpetual or for a temporary period.

Alimony payments may not be issued if both spouses have similar annual incomes or if the marriage is fairly new. A judge—or both parties—may set an expiration date at the onset of the alimony decree after which time the payer is no longer required to provide financial support to his or her spouse. Alimony can also be terminated in the following situations: when a judge sets a specific date, a former spouse remarries, children no longer require a parent at home, retirement, death, or if a judge deems that the recipient is not making efforts to become self-sufficient.

Other Considerations

For the receiver, alimony payments have often been considered to be taxable income by the IRS; for the payer, they have been a deductible expense. However, The Tax Cuts and Jobs Act (TCJA) put forth by the Trump administration eliminated the tax deduction for alimony paid for divorce agreements executed after Dec. 31, 2018. Under the new rules, alimony recipients will no longer owe federal tax on this support. 

Alimony should not be confused with child support. Alimony payments are specifically meant to support a spouse or former spouse, while child support payments are specifically intended to support one or more children from a dissolved relationship or marriage. Note that neither alimony nor child support payments may be discharged in bankruptcy.