Alimony & Spousal Support in Georgia
Choose the North Atlanta Divorce Lawyer at Brenner Law Group, LLC
For many of our clients, alimony is an emotional and stressful topic. However, if you are faced with dividing assets and income in the divorce, alimony can actually be a helpful tool. Let us assist you in utilizing that tool!
Alimony is tax deductible to the one who pays, and taxable to the one who receives. The advantage of using alimony in the financial mix is that your Sandy Springs divorce attorney can make the same money go farther by putting it into the taxable income of the person who pays the lowest taxes. For that reason, at Brenner Law Group, LLC we tell our clients that we should always take a holistic view of the financial picture when making a decision about offering or seeking alimony.
To ensure that your rights and interests are protected during alimony and spousal support proceedings, we encourage you to enlist the legal counsel of a seasoned and professional lawyer. Ms. Brenner has more than 30 years of experience in Georgia family law, and she can provide the strategic, detailed, and dedicated representation you deserve.
Alimony Basics in Georgia
Alimony is a financial allowance made by one spouse to support of the other when they are both living apart. The purpose is to give economic support to a spouse in need, although this is not the sole basis of the determination, as the ability to pay will also be considered.
Alimony can also affect child support, because alimony shifts the before-tax (gross) income of the spouses. Child support calculation is based on a percentage of gross income. Lowering gross income by way of alimony can be a way of lowering the payment of after-tax dollars used for child support.
Here are some salient facts about alimony:
- A judge does not have to award support payment; and
Alimony can be structured in different forms or combinations of forms:
- Lump-sum: A one-time payment that either stands alone, or is made in addition to other periodic payments.
- Fixed-term: Payments made over time, where the total amount to be paid is either stated in advance, or calculable from its terms (e.g. $1,200 per month for 20 months = $24,000); this type of alimony is probably not modifiable.
Open-ended: Periodic payments without either an explicit termination or total amount
paid. This type of alimony is subject to termination or modification upon
the occurrence of certain events, like:
- Remarriage of the receiver;
- Proof of a cohabitated relationship; and
- Material changes in circumstance affecting one party’s ability to pay or the other party’s need.
- Payment to third parties on behalf of spouse or children: Open-ended alimony does not have to be a payment for a specific amount each month made to the receiving spouse. It can also be a payment to third parties for anything from the mortgage, to utilities, insurance payments, or payments for the kids’ orthodontia so long as the payment is pursuant to a written agreement.
Percentage of income from paying spouse’s business: If you are
ENTREPRENEURS or BUSINESS OWNERS it is important that you understand how alimony can impact your assets.
- Scenario: The paying spouse has a business and the receiving spouse feels that he or she contributed to the development of the business. Alimony can be expressed as a percentage of the business income. This form of alimony has the unique tax advantage of not being subject to IRS recapture rules. This is one place that expert tax-planning input can make a tremendous difference in the financial impact of your divorce.
How Much Will I Have to Pay in Alimony?
There is no statutory guideline in Georgia for determining the amount of alimony that should be paid. Rather, the code sets out factors that should be taken into consideration including the standard of living, how long the marriage lasted, the age, the resources available to each spouse, any contributions to the household during the marriage, the earning capacity of each spouse, and more.
Alimony is paid with pre-tax dollars. That is to say that the alimony is a deduction to the paying spouse, and income to the receiving spouse. For that reason, it is important to consider the relative marginal tax rates of the paying and receiving spouses when thinking about alimony as part of the overall financial settlement in a case.
How Does the Judge Decide Whether to Award Alimony?
The factors that the judge or jury may consider when deciding whether or not to award alimony, and if so, how much, are set out in the Georgia code and in various cases. Some of these factors include:
- Adultery or desertion on the part of either spouse - if it is proven that the separation between the spouses was caused by the adultery or desertion, the culpable party will be barred from receiving alimony
- The needs of the spouse seeking alimony, and the ability of the other spouse to pay
- The cause of the parties’ separation
- Evidence of conduct toward the other
Alimony can only be awarded if there was a valid marriage and then a divorce. So, if the marriage was invalid, or no divorce granted, there can’t be alimony.
You may think that if you don’t say anything about alimony in your agreement, then there won’t ever be any. That is not necessarily true. The Court could reopen the issue later upon request of either spouse. You can waive alimony, but that has to be in writing in your agreement.
It’s important to understand that alimony is NOT automatically a charge against the estate of the person who is required to pay.
Alimony and Marital Conduct
The law surrounding spousal misconduct is a little different in regard to initial determinations in the divorce, and when it comes to grounds for modifying or enforcing judgments after the divorce. One thing is certain: conduct (such as adultery) is relevant to determining whether one is entitled to alimony at all.
However, it is not absolute by any means that an adulterous spouse will not get alimony. First, you must prove the adultery, which has become more difficult because of recent case rulings that restrict the kind of evidence that can be used. Secondly, one has to prove that the adultery is the actual procuring cause of the dissolution of the marriage. This is not always so easy to do. Finally, the fact that there has been adultery does not preclude the parties from agreeing on alimony.
Also, bear in mind that in Georgia there is no punitive alimony. In other words, a greater amount of alimony than might otherwise be warranted will not be awarded just to punish someone.
After the divorce, having a cohabitated relationship can be grounds for modifying an alimony award. So, it is important for your attorney to clarify in any final judgment or settlement agreement language that will make it easier for you to modify based on a live-in lover if you are paying alimony, and harder if you are the receiver.
Please see the section on Modification of Judgments to learn more about how cohabitation affects modification of alimony awards in Georgia.
Alimony and Taxes
The IRS may treat AS ALIMONY any payment made on behalf of a spouse that meets the IRS definition of alimony. Therefore, even if you don’t call it “alimony”, the IRS may treat it like alimony.
For example, each of the following qualify as alimony payments:
- An ex-spouse’s health or life insurance
- An ex-spouse’s student loans
- Maintenance or mortgage payments on property that the receiving spouse uses, but the paying spouse still owns (e.g. husband retains title to marital home, wife is awarded possession of house, husband pays mortgage)
If you haven’t specified in your property agreement whether a payment is or is not taxable alimony, you are opening the door to a tax windfall for one party and unexpected tax liability to the other.
Alimony, the IRS, and Maintenance Recapture
If you are in a higher income bracket than your spouse, the IRS would love to “recapture” payments you have made as alimony back into your income. Why? Because they can tax the money at a higher rate! And, since this will probably be discovered well after payments have been made (for example, during an audit), it may mean penalties and interest, as well. You should be aware of these two recapture rules:
The Steep Stair-Step Rule
Alimony payments in the first year cannot exceed the average payments for the second and third year by more than $15,000. Payments in the second year cannot exceed payments in the third year by more than $15,000.
Also, be careful because temporary alimony that is paid according to a Court Order is not subject to recapture, but temporary alimony that was not paid pursuant to a Court Order DOES count in the steep stair-step rule and is subject to recapture.
There is no recapture if the payment is based on a percentage of business income or business profit for at least three years.
The Related Contingency Rule
If your plan calls for alimony to be reduced automatically upon the occurrence of a contingency related to a child, or a time which can clearly be associated with such a contingency, the IRS may deem that your alimony is, in fact, child support.
Don’t Face This Alone; Call Brenner Law Group Today!
The tax law affecting alimony, child support, and property division can be complex and can change significantly, which is why you need to get expert advice.
If you have a question about alimony, child support or property division, don't hesitate to call us at (404) 418-4006 or email us for a consultation.