Alimony is tax deductible to the payor, but child support is not
For parties who are divorced prior to December 31, 2018, the person who is paying alimony is entitled to deduct the amount of alimony they pay on their tax returns, and the person who is receiving alimony is required to report that alimony as income on their tax return. Under the new tax law, however, this will not be the case for anyone divorced in 2019 and thereafter. In anticipation of this change in the tax code, practitioners believe that the best way to handle it moving forward will be to tax effect all alimony obligations upfront so that the parties are essentially in the same position they would be under the prior law.
Child support is calculated per the Guidelines, but alimony is not a set formula
Child support is calculated pursuant to the New Jersey Child Support Guidelines, which is a computer program that allows attorneys to enter the weekly amount of each party’s gross income, as well as any alimony that is paid or received. The program applies taxes and also considers the number of overnights that the non-custodial parent has with the children, the payment of health insurance premiums, and the number and ages of the children. From there, the Guidelines will provide the appropriate amount of child support. Many people assume that alimony is figured via a similar calculation, or that there is a set formula that is applied to a case, but alimony in New Jersey is based on a number of factors. The overarching consideration is one party’s needs versus the other party’s ability to pay to cover the shortfall to those needs. It is a very fact sensitive analysis and is essentially exactly the opposite of the formula-based child support guidelines.
Alimony terminates at a set point in time. So does child support!
For marriages that spanned less than 20 years in length, parties generally agree to a limited duration time period for the payment of alimony. Alimony in those cases will usually terminate upon the expiration of that time frame, the death of either party, the remarriage of the party receiving alimony, or in some cases, the cohabitation of the party receiving alimony. Child support also terminates at a set time, based on a variety of factors. Most parties agree that child support will terminate upon the child reaching age 18 or graduating from high school if the child does not continue onto college; the child completing a full-time program in college; entry into the military; and marriage. Many parties also agree that child support will not continue beyond age 23, despite the child remaining in school.
If you have questions regarding alimony and child support, contact the attorneys of DeTorres & DeGeorge to schedule a consultation.