There are three different ways that maintenance can be ordered by the court;
- as a monthly amount that does not have a specific ending date and will only terminate upon the remarriage of the receiving spouse, the death of the receiving or paying spouse or by a modification order entered by a judge
- as a monthly amount that is awarded for a specific amount of time and is generally not modifiable, and will end upon the stated expiration date of the maintenance order
- as a one-time lump gross maintenance order
To determine if maintenance should be paid a two-part statutory test is initially evaluated by the court:
- Is there sufficient property, including marital property, apportioned to a spouse to meet his or her reasonable needs; or
- Is the spouse capable through appropriate employment to meet his or her reasonable needs, or is an employee spouse the physical custodian of a child whose circumstances make it appropriate that spouse not seek employment at this time.
If a spouse cannot meet their reasonable needs through property or employment, the court may award maintenance. Whether or not a party should be awarded maintenance, the amount and duration of maintenance are calculated on a case by case basis. The party that is requesting maintenance has the burden to prove that they need financial help to provide for their reasonable needs.
Divorcing parties can enter into an agreement for maintenance and agree on the amount and the duration of the maintenance award and this is called a contractual maintenance.
If a party requests a modification of the standing maintenance order and the court order statutory maintenance award is deemed to be modifiable, the court may order that the maintenance is decreased, increased, terminated, extended or otherwise changed based upon a substantial and continuing change of circumstances.
If spouses follow certain rules, the IRS allows the paying spouse to deduct the alimony payments for tax reporting purposes. In turn, the recipient must report the alimony payments as income.
- Maintenance payments must be in cash or by check
- Make maintenance payments in accordance with the maintenance order
- Make maintenance payments separately, do not bundle with child support payments. Child support payments are never tax deductible
- Make sure maintenance order specifies that maintenance payments will end upon the death of the receiving spouse
- Maintenance payments must be made after a physical separation. If parties are still living together maintenance is not tax deductible
- Do not file a joint tax return
- Do not pay extra up front, carefully review IRS rules against front-loading in the first three post separation years
The spouse that is paying maintenance can deduct the amount of maintenance payments without having to itemize deductions on IRS Form 1040. Do not use 1040EZ or Form 1040A.
Maintenance is typically not dischargeable in bankruptcy.
RS Law can help you determine if you are entitled to spousal support or can avoid paying spousal support. Call today for a consultation.