In New Jersey alimony (sometimes called spousal support or maintenance) is an award of money from one spouse (the payor) to their ex-spouse (the payee) after a divorce. The purpose of alimony is to help the spouse receiving alimony (the payee) maintain a financial lifestyle which is reasonably comparable to the financial lifestyle enjoyed by the parties during the term of their marriage.
Alimony is not awarded automatically. It has to be demanded. In terms of duration of alimony payments, the courts recognize four distinct types of alimony: open durational (which recently replaced permanent alimony), limited duration (term) alimony, rehabilitative alimony and reimbursement alimony. Each type of alimony is discussed in greater detail in separate blog posts.
NJSA 2A:34-23 is the specific statute which governs alimony awards in New Jersey. The statute lists 14 factors which the court must consider in order to decide whether to award alimony. The 14 factors are set out in detail on my website itonlaw.com.
Alimony is Tax-Deductible to the Paying Spouse
Alimony is generally tax deductible to the payor and is treated as taxable income to the payee. To illustrate, if husband is paying alimony of $2000 per month to wife, the husband can take the $24,000 annual alimony payment as a tax deduction. The wife must include the $24,000 annual payment as income on her tax return.
Alimony is Considered Income for Child Support Calculation Purposes
With regard to calculating child support, alimony is included as income to the party receiving it, and the amount paid is deducted from the income available to the other party. For example, if wife earns $50,000 per year and husband earns $100,000 per year, and husband pays wife alimony of $16,500 per year ($317 per week) wife’s income for calculating the amount of child support that she will pay or receive is: $50,000 + $16,500 = $66,500 per year. Husband’s income for child support calculation purposes would be: $100,000 – $16,500 = $83,500.
Alimony and the Family Part Case Information Statement
The Case Information Statement (CIS) is a 9 page document which is prepared by each party in a contested case. The CIS is exchanged between the parties and filed with the court. With regard to alimony, the most important pages of the CIS are Pages 5 and 6, which list each parties joint marital expenses and each parties individual expenses (with or without the children). The expense numbers listed on the CIS are reviewed by the judge and they are the numerical basis for the award or denial of alimony.
For example, let’s say wife makes $60,000 per year ($5000 per month) and she lists individual CIS expenses of ($3200 per month). That means that after she covers her expenses she still has $1800 per month of disposable income. ($5000 – $3200 = $1800). The court may ask – does she need alimony in this situation?
The reality is that her $5000 per month income is taxed so that her net monthly income is closer to $3600 per month, leaving her $400 per month as disposable income. However, even analyzing wife’s income and expense numbers on an after tax basis, she still shows that she can maintain herself and have $400 per month in disposable income without alimony. Again, these numbers beg the question does she need alimony to maintain the marital lifestyle?
Informal Calculation of Amount of Monthly Alimony – 1/3rd of the Difference in the Parties Incomes
Over the last 10 years there has been informal adoption of a quick method to calculate a “ballpark” alimony figure. The method is to employ 1/3rd of the difference in the parties incomes as the metric to calculate the monthly alimony obligation. To illustrate, let’s say that husband earns $120,000 per year and wife earns $60,000 per year. The difference in their incomes is $60,000 per year. 1/3rd of the $60,000 difference is $20,000. The approximate annual alimony payment from husband to wife would be $20,000 per year, or roughly $1600 per month. ($1600 x 12 months = $19,200). After payment of alimony husband would have $100,000 and wife would have $80,000. So although the parties do not have equivalent incomes they have narrowed their income gap from $60,000 to $20,000 per year.
It should be noted that this informal calculation method is not based on the New Jersey statutes. The statutes require an analysis of the 14 factors set forth in NJSA 2A:34-23. The 1/3rd income difference method is a quick and useful tool to initiate discussions about the appropriate range for a reasonable alimony payment.
If you have any questions about alimony in New Jersey – how it is calculated, or when it is awarded, you can contact me at 201-731-3086 (toll-free 844-431-3380) or via e-mail using the contact form. I have been practicing family law for over 20 years, representing clients statewide – primarily in Bergen, Hudson, Essex, Passaic, and Union counties. The initial consultation is free of charge.