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Periodic Alimony is considered taxable income to the spouse that receives it, and is a non taxable deduction to the spouse required to pay. There are two general kinds of alimony in Alabama divorces: 1) one constituting support of the spouse (referred to as "periodic alimony"); and 2) the other representing a property settlement (referred to as "alimony in gross") between the spouses. After 30 days from when the settlement was reached, the agreement can no longer be modified, even if the spouse remarries or moves in with another partner. Alimony in Alabama. Up to this point, alimony has been tax deductible for the payer and taxable income for the receiver. In Alabama, courts award lump sum alimony called "alimony in gross," which gives a present value to the recipient’s rights to alimony and is similar to a division of property. Consider the fact that the alimony payor is almost always the person making more money. Alimony payments received by the former spouse are taxable and you must include them in your income. Alimony is normally reported as taxable income to the recipient and is available as a deduction to the payor. Periodic Alimony is usually a fixed sum of money paid on a monthly basis. Alimony Payments. From a tax perspective, temporary spousal support is equivalent to permanent spousal support. Just take a look at three of the ways that the law has changed Alabama alimony. Under the new law, periodic alimony is still possible but, unlike in the past, there are specific limitations on when it may be awarded. It is often used to divide the proceeds from the sale of a family home or to split up a joint bank account and stock holdings. Generally referred to as “maintenance” in Alabama, it is the obligation of one person to provide financial support to their former spouse following a separation or divorce.. As I discussed in a previous post, the Alabama legislature passed new legislation affecting several areas of divorce litigation.Today, I will discuss the substantial changes to alimony rules. Even if periodic alimony has been ordered permanently, it can be terminated if the recipient gets remarried or moves in with someone of the opposite sex. In the United States, alimony is taxable for the recipient, though the spouse who pays alimony can under most circumstances deduct alimony payments from his taxable income. This arrangement has served as a sort of alimony subsidy, incentivizing higher alimony payments. Alimony law is often very confusing and comes with a lot of moving parts. Home » Spousal Maintenance/alimony » When alimony received becomes taxable income for the IRS. In Alabama, alimony may be paid as a lump payment at the dissolution of the marriage and works much in the same way as the division of joint assets. Alimony length is usually based on length of marriage - one commonly used standard for alimony duration is that 1 year of alimony is paid every three years of marriage (however, this is not always the case in every state or with every judge). You may have heard that alimony payments under newly executed divorce arrangements are no longer deductible for federal income tax purposes. Alimony comes in two forms under Alabama law: In gross or periodic. Each type of alimony is intended to serve a different purpose. Why the change? The IRS doesn’t care about that. Periodic Alimony in Alabama . While the United States does levy taxes on alimony, there are no taxes on child support received from a former spouse or partner. Is alimony taxable? The purpose of alimony is to further the same standard of living that a couple enjoyed during their marriage after divorce. And recipients of alimony payments always had to report the payments as taxable income. It only cares if whether that alimony is “income.” So is it? Because there may be tax advantages to paying alimony, you may want to consider it as a bargaining chip even if a judge wouldn't ordinarily award it in your case. In Alabama, there are six kinds of alimony you need to know about: Permanent alimony is regular payments made by one spouse to the other for an indeterminate amount of time.   The Tax Cuts and Jobs Act (TCJA) eliminated the alimony deduction from the tax code from 2019 through 2025 for most divorce agreements and decrees entered into during that time. If one spouse cannot be self-supporting, courts in New Hampshire look to the other spouse's ability to pay when determining an alimony award. Divorce law in other countries may treat taxes on alimony differently, so it's a good … Alimony payments are no longer tax-deductible, and the receipt of alimony isn't taxable as income for divorces entered into after December 31, 2018. There are appropriate factors to consider when dealing with alimony in Alabama. Therefore, in most cases that person has a higher effective tax rate. It is not cancelled by remarriage. (At the end, I also briefly mention the impact of the new tax bill for alimony as well.) The parties can change or eliminate this tax treatment through a specific agreement in the divorce decree.If an ex-spouse is expecting to receive a certain amount of alimony in order to help support … Interim Alimony. Alimony may also be discontinued upon the remarriage or cohabitation of the receiving spouse. Alimony in gross is a lump sum payment made at one time. The divorce court will order it for a set number of years (temporary alimony), or for the rest of the spouse’s life (permanent alimony). Monthly alimony payments are tax deductible to you if you pay them them and are considered taxable income to the person who receives the money. What Is Alimony: Alabama Alimony is financial support the court awards to one spouse who needs assistance, paid by the other spouse that has the ability to pay. In 2019, tax deductions for alimony will no longer be permissible, and the tax burden will fall on the person paying it. Think about it, though: alimony in AL is necessary for certain situations, and while child support is a rather fair deal, easy to think and even figure, alimony – also known as spousal support – can get a little more complex. Periodic alimony, on the other hand, is a series of payments made over time to help the receiving spouse cover his or her cost of living. On April 13, 2017, the Governor signed a new bill into law, creating some big changes to how Alabama courts will decide alimony. Alimony in gross is also non-taxable to the recipient. Further, a judge has tremendous flexibility in ordering how long the support should last. 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