Alimony is regarded as court-ordered payments given to a spouse or former spouse in a separation or divorce agreements. The aim is to provide financial support to the spouse that earns a lower income or in cases of no income at all.
Alimony can either be awarded to a husband or wife; nevertheless, in cases where children are involved, the man is mostly the breadwinner, and the woman may have forfeited a career to train the kids and will be financially disadvantaged. A divorced spouse is entitled to live the same quality of life he or she had when married.
The amount and time a spouse must pay alimony depend upon the length of the marriage and current and likely incomes for both spouses. Many factors are different in each; however, if a couple separates or divorces after ten years, alimony is usually awarded unless both spouses have equal earning power. Else, the lower-earning spouse will likely receive alimony payments.
Alimony generally stops with a specific date set by a judge, a former spouse gets remarried, retirement, children, no longer need a parent at home, death or if a judge decides that the recipient is not putting in efforts to become self-sufficient.
About the receiver, alimony payments are regarded as taxable income; for the payer, they are considered as a deductible expense. Alimony should not be mistaken for child support. Alimony payments are necessarily meant to assist a spouse or former spouse, while child support payments are mainly intended to support one or more children from a dissolved relationship or marriage. Neither child support payments nor alimony may be discharged in bankruptcy.
Paying alimony to your ex-spouse doesn't paint you to be a wrong person. See it as part of the cost of going into a marriage that you initially thought would last until death separated you. Alimony has been lawful for 100 years, though it is ordered less frequently these days, there is no indication that courts are going to stop making alimony orders for good.
The question to ascertain qualification for alimony is resolved by considering your capacity to earn—this is not necessarily your current earning at the time you go to court—the amount your spouse makes, and your standard of living during the period of marriage.
You may also be expected to adjust in your life and work. If for example, you have a part-time job that has low pay, you may be expected to try and secure full-time employment in a better-paid field. "vocational evaluators" are expert who is sometimes hired to give a report to the court on the job prospects for a spouse who hasn't been wholly employed for a while.
Alimony is referred to as tax-deductible for the paying spouse and constitutes taxable income for the supported spouse. It is an essential reason to keep adequate records if you are receiving or paying alimony. Keep in mind that under the 2017 Republican Tax Bill, starting January 1, 2019, persons paying alimony will no more be eligible to deduct their payments for tax purposes, and supported spouses won't have to add alimony in their gross income.
Alimony Payer
The individual paying alimony should keep:
a. list containing each payment (check number, date, and address to which the check was sent)
b.the originals copies of checks used for payments (keep in a safe place, such as a safe deposit box and the month of payment should be well indicated on each check) if the amount were in cash, ensure to safe keep the receipts for each payment, signed by the recipient.
Ensure these records are kept for at least three years from the date you file the tax return deducting the payments.
Alimony Recipient
The recipient spouse should create a list that shows each payment received. The following information should be included;
a. Date payment was received
b. Amount received. Check number or other identifying information, the account number on which any check is written. The name of the bank on which the check is drawn or money order issued
c. A photocopy of a money order or check, and
d. A copy of any signed receipt you render for cash payments.
If your spouse refuses to pay
In conclusion, if you get an alimony order but your spouse insists on not making the expected payments, take fast legal action to enforce the law via a "contempt" proceeding. A court order to pay monthly alimony is as valid as any other court order and, if properly handled, can be enforced with the genuine possibility of getting regular payments. If needed, a court may jail a reluctant payor to show a high level of seriousness.
Advanced Accounting & Tax Planning