If you are considering or preparing for a divorce in Massachusetts and have children, whether the divorce is amicable or hostile, contested or uncontested, you need to understand the relationship between those payments known as child support and those known as alimony.
Must one spouse pay (and can the other spouse get) both child support and alimony?
In negotiating the terms of your divorce, what are the advantages and disadvantages to each? Are there different tax consequences associated with child support or alimony?
The answers to these questions depends on the circumstances of your particular marriage, your family's financial situation, and how the judge views the law, but here is some basic information to help you get started.
How is child support different from alimony?
Child support is paid by one parent to the other to help cover the costs of raising the children of the marriage after separation and divorce. Child support protects children from a lowered standard of living after separation or divorce, and makes both parents responsible for child support according to their incomes. Child support is usually set at 11%-22% of the parents’ combined gross income.
Alimony is higher than child support.
Alimony is paid by a spouse who can pay, to a spouse in financial need of support for a reasonable length of time. It is paid by the higher earning spouse to the lower earning spouse to help pay for expenses. Alimony is usually 30%-35% of the difference between the parties’ gross incomes.
Alimony is time-limited and depends on how long the marriage was and the parties’ situations during the marriage and at the time of separation, although a judge can exercise discretion to depart from those limits. Alimony promotes self-sufficiency after divorce, yet still protects lower-earning or non-earning spouses.
There are four types of alimony:
General Term Alimony: support paid by the higher earning to a lower earning or non-earning spouse for a period of time based on the length of the marriage. It is suspended, or ended if the receiving spouse begins living with a new partner, and ends when the paying spouse reaches full retirement age.
Rehabilitative Alimony: support paid by a higher earning spouse to a lower earning or non-earning spouse who is expected to become financially self-sufficient by a predicted event, for example: finding a job, completing job training; or getting a payment due from the paying spouse under a judgment. It may only be awarded for up to five years and is intended to help a receiving spouse get education, job skills or employment after a break during marriage.
Reimbursement Alimony: short term payments or a lump sum payment to a spouse after a marriage of no more than five years long. Its purpose is to pay the receiving spouse for contribution to the financial resources of the paying spouse during the marriage, such as allowing the paying spouse to complete education or job training; and
Transitional Alimony: payments of support by one spouse to the other spouse after a marriage of no more than five years long to help the receiving spouse adjust to a different lifestyle or a move as a result of the divorce. It also may be ended after a one-time payment and payments may not last longer than three years.
How do child support and alimony affect each other?
Neither the alimony nor child support laws have specific rules or suggestions for calculating alimony and child support in cases where both may be awarded. But, the alimony law does state that when a spouse is asking for both child support and alimony, the court cannot count income that has already been counted for child support when ordering alimony.
Does this mean that a spouse cannot get alimony if child support is ordered?
Not necessarily. The alimony law also says that the court can consider child support to be “unallocated or undifferentiated alimony and child support.”
What does that mean? That means that the court is free to order a greater amount than child support that would be called alimony instead of child support, and would still satisfy child support obligations.
How will that affect me?
In some situations, this can be a win/win for both parties as the receiving spouse would get more but the paying spouse would enjoy tax savings. This is because alimony but not child support is deductible for the paying spouse.
Will all Family Court Judges order undifferentiated alimony/child support?
Not necessarily. Different judges take different approaches. Some judges will not award alimony if they are making an order for child support. Under this scenario, a stay-at-home spouse with zero income raising the children would get only the amount he or she would receive under the child support guidelines.
Other judges first make an award of alimony, and then using the parties resulting income, calculate child support, resulting in higher awards.
Still other judges label child support as alimony as explained above, resulting in higher awards, but also with potentially better tax consequences for the paying spouse. This approach is not without risk, however. Any alimony award that ends around the same time that a child becomes “emancipated,” that is, reaches a certain age under the law, can cause the IRS to take back taxes that would have been owed under child support. An experienced divorce lawyer can help you stay on the right side of the IRS by drafting a separation agreement designed to avoid tax pitfalls.