Divorce is a tricky legal process, and going through the process of legal separation can bring on a multitude of new systems to get used to. Dividing assets, child visitation schedules, and separating joint accounts can all be stressful when adjusting to your divorce. One of the most highly contested outcomes of a divorce settlement is spousal support and figuring out whether or not your payment plan accurately fits your and your spouse’s needs. This is crucial for creating a functioning agreement. In the Orange County area, the Law Office of Kevin L Qualls can assist you in determining a successful support plan for you and your ex-spouse.
What Is Spousal Support or Alimony?
Spousal support, sometimes called alimony or spousal maintenance, is a family law issue that creates a payment schedule between ex-spouses that helps generate financial stability for lower-income parties after a separation. For example, if you are the main breadwinner in your relationship, a payment plan based on your income, marriage length, and outstanding financial responsibilities may be included in your divorce settlement, and you may be ordered to make payments to your spouse based on these factors. For those on the receiving end of spousal support, in addition to other payments like child support, your ex-spouse may be required to send you money monthly as a way to help restore your financial stability.
Is There a Difference Between Spousal Support and Alimony?
Although they essentially mean the same thing, spousal support and alimony have slightly different meanings. The origin of the term “alimony” comes from the practice of men supporting women after a divorce. Mainly by providing monthly payments, alimony is an old-fashioned, gendered way to say spousal support.
In some states, depending on whether or not one party is at fault for the divorce, the alimony payments may fall on them as a form of penance for their wrongdoings in their marriage. In California, a divorce can be brought on by either spouse, regardless of gender, and once the main factors of the case are decided in terms of assets and fiscal divisions, the party leaving the marriage in a higher financial standing would be made the originator of any support payments.
Why Is Spousal Support Hotly Contested?
Being a community property state, California law determines any assets accrued during marriage to have shared ownership between both spouses. In the event of a divorce, when these assets are split, the value of each, as well as other financial and lifestyle factors, combine to create a foundation for spousal support payments. For example, taking out a mortgage on your home with your spouse, or buying a car with money in your shared bank account, is an example of community property, and depending on which of these assets you retain during your settlement, the amount of money that goes into your monthly spousal support plan is affected by these factors.
What Factors Contribute to Spousal Support?
The different factors that go into determining a spousal support claim combine your financial interests with different aspects of your life and marriage, overall having a profound effect on your payments. Between your finances, job status, and child care responsibilities, the range of factors that affect your monthly spousal support payments, and subsequently your spousal support payment plan, are all affected by certain amounts, statuses, and prior obligations. Some of the biggest factors that go into these payments include:
- Fiscal Responsibilities: Besides evaluating and splitting assets for creating a spousal support payment plan, the individual fiscal responsibilities of each spouse are factored into your overall spousal support system as a crucial part of payment decisions. Job stability is also a large contributing factor to the fiscal aspect of spousal support payment plans, with job security being the main indicator of stable income needed for the court’s overall calculations. Things like accrued assets, awarded assets, overall financial standing, income, and tax stipulations all contribute to your overall spousal support plan.
- Child care: Depending on whether or not you receive custody of any shared children from your marriage, the expenses tied to each child can be factored into your overall financial standing. Spousal support is kept separate from child support payments, with child support going directly to your child versus spousal support going directly to you. However, there is a gray area considering outstanding agreements concerning the welfare of the child. For example, if you and your ex-spouse share a child who is going to college or attends a school that has yearly tuition, and you agree to pay for that tuition, these payments can be factored into your overall necessary spending that is tied to your income.
- Health and Age: The health and age of both parties during a divorce are crucial when dividing assets and especially crucial when deciding on spousal support payments. Depending on the age of each party, including whether or not they are in good health at the time of the divorce, the stipulations of your spousal support plans can change to adapt to these terms. For example, chronic health conditions, especially those that require expensive routine payments, can be factored into the monthly expenses, either lowering or increasing spousal support payments as a way to compensate for this expected routine payment.
- Employment: One of the biggest factors impacting spousal support payments is employment and employment benefits. For spouses that are both employed, the party earning more money per year will make spousal support payments to the party earning less. Each party’s earning capacity, as well, is factored into a monthly payment plan, and any expected changes to future earning capacity, either by unemployment or an increase in child care duties that result in less time available for work, are also included in spousal support discussions.
Other factors, like the marriage length or education level of each spouse, are key factors used to evaluate either the time length of the payments or the overall stipulations of each plan. Starting with marriage length, marriages up to ten years in length can result in spousal support payments lasting up to 50% of the length of the marriage. For marriages considered “long term,” or lasting longer than ten years, no specific deadline for payments will apply, and the length of the payment schedule will be decided in court.
In terms of education level, in cases where one spouse is paying for their education, the cost of these payments can be factored into the monthly scheduled payments. By implementing practical counsel and strategic representation of all of your expenses, the amount of money you pay in spousal support will accurately affect your overall living standard.
How Do Taxes Affect Spousal Support Payments?
Up until 2017, spousal support payments were eligible as tax write-offs for those making support payments. In 2018, Congress passed the Tax Cuts and Jobs Act (TCJA), which redefined the tax code and changed certain stipulations surrounding write-offs and spousal support payments. Although the specific pieces of the act that affected divorcing couples did not go into effect until 2019, the changes made to tax-filing practices were ultimately shifted when federal income tax deductions were removed. For those with a spousal support payment plan, this stopped the ability to list any payments made as deductions, and for those on the receiving end of the payments, this removed the tax from these payments.
In California specifically, the TCJA did not affect the statewide rules on the ability to list spousal support payments as tax deductions. The state legislature created a list of criteria that needs to be met to use this tax deduction. Previously, different forms of payment, like supplying goods and services for your former spouse, could be considered an applicable form of spousal support. With new guidelines concerning these payments, strict rules on what can be considered adequate spousal support dictates the likelihood of writing these payments off as tax deductions. For those making spousal maintenance payments, you must:
- Pay each payment with cash, checks, or money orders. Material goods like groceries will not be covered under this stipulation. In past cases, awarding assets to the receiving party in a spousal support situation was considered the same as payment. However, the TCJA outlines that support payments must be made with some form of currency.
- Your divorce paperwork must not label these monthly payments as anything but spousal support, meaning that monthly payments used for child support do not fall under the same category as spousal support and cannot be treated as such when writing them off on your taxes.
- The payments made under this payment plan are only made if living in different houses. Cohabiting divorced parties cannot be eligible for these write-offs.
- Although somewhat self-explanatory, if your ex-spouse passes away and is no longer receiving spousal support payments, any payments made within that fiscal year can be written off as tax deductions.
- If your spousal support payments are kept separate from any child support obligations, you can list them as tax deductions. Similar to the stipulations regarding the wording of your support payments in your divorce paperwork, keeping your child support payments separate from your spousal support payments helps when filing your support payments as tax write-offs.
California tax code currently allows those accepting spousal support payments to list these payments as income. The volatility of tax codes can change these stipulations in an instant, causing you to rethink your finances. Depending on whether or not you are currently in a spousal support payment plan, knowing how these tax laws change your finances is essential for your financial planning. For those in the spousal support paying position, following these guidelines is crucial for letting you write these payments off while doing your taxes, helping you save money on your income tax filings after finalizing your divorce.
How to Prepare for Spouse Support Payments
As previously mentioned, a few of the most prominent factors relevant to spousal support negotiations and litigation are the length of the marriage, the respective incomes of both parties, and the lifestyle maintained during the marriage. Beyond these key factors, the result of these payments and charges can become the primary driving force behind contention with spousal support payments, causing further strife between you and your ex-spouse. Other key considerations concerning the application of these factors in your case may include:
- Timeframe of Support Payments: As previously mentioned, the amount of time spousal support is paid is dependent on marriage length. However, the overall decision for a final payment timeline rests in the hands of the court. Both temporary and final spousal support orders may be issued, and it is important to be fully prepared for the proceedings that determine each type. For example, a marriage lasting over ten years is considered a “long-term” marriage by the court, and outlining the number of payments made for the party paying spousal support can vary when compared to the guidelines surrounding more short-term marriages.
- Amount Paid in Support: Similar to awarding different assets, the amounts paid in spousal support payments can vary based on the combined financial standing, income, and assets given to each party. Spousal support awards specify not only the amount to be paid but also the duration (how long payments will continue), and both issues should be carefully considered as we target the outcome that best protects your financial future. If you find yourself in the higher-earning income party, you will be in a position where, if applicable, you will be paying spousal support. On the other hand, if you are deemed the lower-earning party in your divorce, you will receive any spousal support payments.
- Possibility for Dispute: As with any decision based on finances, the likelihood of disputes based on these orders is high. The relationship you have with your ex-spouse, from the onset of your divorce hearing to your subsequent settlement, is important to factor into any large-scale decision-making based on the likelihood of disputes. Disputes often revolve around issues such as the actual incomes and financial needs of each divorcing spouse, the real earning capacity of a non-working or underemployed person, and other issues. In some instances, these disputes can bring up actual changes that need to be made to create a fair spousal support plan, but at other times, these disputes can be menial, not offering any substantial means for change.
Although the key determining factors that go into deciding the monetary amount of each payment are important, the effects of putting this system into place are extremely important as well. Depending on whether or not you are in the party paying spousal support or on the receiving end of the payments, establishing an effective, fair, and legally sound payment plan is crucial for both you and your ex-spouse.
Turn To A Proven Orange, CA "Alimony" Dispute Lawyer
On spousal support and all other considerations in divorce, attorney Kevin L Qualls is deeply committed to offering reliable information and clear, realistic guidance. Whether you believe you should be awarded spousal support in your divorce settlement or need to defend against unreasonable demands by your wife or husband, our legal team can help.
At Kevin L Qualls Family Law, you can benefit from our decades of experience negotiating favorable outcomes in divorce cases involving complex disputes over property division and other financial issues. This includes successful representation of many high-earning professionals, executives and their spouses. We have the knowledge and resources to evaluate every angle on your case and identify the best strategy for you.
For a free half-hour consultation directly with knowledgeable Orange County spousal support attorney Kevin L Qualls, call or email our conveniently located offices today.