How Is Alimony Calculated in New Jersey?
If you are divorcing and expect to be asked to pay alimony, you are probably wondering how alimony is calculated. Will the alimony determination, otherwise termed spousal support, be fair to you and not leave you in difficult financial straits?
While you may have gone online and found alimony calculators where you punch in your income and that of your spouse and get an estimated alimony payment (assuming you are using the correct and appropriate incomes for you both), the truth is that New Jersey courts do not use an alimony calculator when it comes to determining the amount of spousal support payments. There is no simple formula in which to plug in a few numbers and arrive at an alimony payment amount. Rather, the process is more in-depth than that, and courts consider various factors in calculating alimony.
Not every divorce involves spousal support, but when it is a possibility, it is beneficial to get legal advice from an experienced alimony lawyer in New Jersey. An attorney who is knowledgeable about divorce and its related complex issues will help ensure that you are treated fairly when it comes to the amount of alimony payments, whether you expect to pay it or are seeking spousal support.
How Does Alimony Work in New Jersey?
The amount of alimony payments is not always determined by the courts, but rather the conversation starts through negotiations between spouses and their respective attorneys, or with a third-party qualified divorce and family law mediator.
Should you be able to agree to terms without court involvement, then those detailed terms need to be put down in a comprehensive agreement; alimony is just one issue of many that need to be resolved and written into a more global divorce agreement (otherwise known as a Marital Settlement Agreement). Reaching an agreement on your own gives you more control over the outcome and can save you greatly in time, money, and stress. Alimony is often one of the most contentious areas of divorce, and if you don’t have someone good in your corner to help negotiate this, then the issue will be brought to the court and the judge will have to decide after a lengthy and costly trial. It is to your advantage to engage the help of a skilled lawyer as early as possible in your divorce and alimony discussions.
Alimony Laws in New Jersey and Factors Courts Consider in Deciding The Amount and Length of Payments
Under N.J.S.A 2A:34-23, the statute that governs alimony in New Jersey, the courts first consider the need of one spouse for alimony and the ability of the other spouse to pay it. Then they consider the following factors in making alimony determinations:
- How long the couple has been married
- The ages and health of both spouses
- The incomes, educations and earning capacities of both parties
- The standard of living during the marriage
- How long the spouse seeking alimony may have been unemployed
- Parental responsibilities of both parents
- Whether one spouse contributed more to caring for children at the expense of their education or career
- How long it may take the spouse seeking alimony to gain education or training to find appropriate employment
- The equitable distribution of property ordered and any payouts on equitable distribution, directly or indirectly, out of current income, to the extent this consideration is reasonable, just and fair
- The tax treatment and consequences to both parties of any alimony award, including the designation of all or a portion of the payment as a non-taxable payment
- Whether either spouse has additional income from investments
- Any other factors the court may deem relevant in making alimony decisions.
You can see that calculating alimony goes far beyond a clear-cut mathematical equation. Every divorce is different, and courts must carefully consider each factor in relation to the divorcing couple’s unique circumstances. Because determining alimony payments involves so many complexities, you can increase your chances of a fair, or at least acceptable, alimony outcome when you have an experienced alimony attorney advocating for your interests.
At Men’s & Fathers’ Rights Divorce Lawyers, our skillful Hackensack attorney will work to limit how much you may have to pay in alimony or work to get you what you need if you are the recipient. Call us (201) 880-9770 to arrange a time to speak with an attorney.
Is Alimony Calculated from Gross Income In NJ?
Gross income is typically used in calculating the amount of alimony payments in New Jersey. Gross income includes the total of earned and unearned wages, salaries, tips, commissions, bonuses, business income, capital gains, investment dividends, rental income, or other income before taxes and other deductions are taken out. The court will look at the gross income of both parties.
If one of the spouses is voluntarily unemployed or is underemployed, income may be imputed to them. This means that the court will review the person’s educational background, work history, ability to earn currently, and/or the average salary according to the Department of Labor in the person’s line of work to determine their earning capacity. The court may use this figure to help them calculate alimony payments, rather than the actual income—or lack of income—of the underemployed or unemployed spouse.
HOW DO TAX LAWS AFFECT ALIMONY?
For divorces finalized on or after January 1, 2019, the Internal Revenue Service (IRS) treats the alimony payments like child support. This means that alimony payments are not tax-deductible to the paying spouse, nor are they reportable income for the recipient on federal tax returns.
If you finalized your spousal support agreement and/or received your support order before January 1, 2019, the paying spouse should be able to deduct alimony payments, and the supported spouse must report and pay taxes on the support unless your divorce agreement specifies otherwise.
However, New Jersey allows for the deduction of alimony payments for payors and requires recipients to report payments as taxable income on their state tax returns; this is an important distinction to know, because this needs to be part of the conversation if attempting to negotiate alimony and can absolutely affect the ultimate alimony amount paid or received.
HOW LONG DOES ALIMONY LAST?
If you have to pay alimony, in addition to how much you may have to pay, you are probably wondering how long you will have to pay it. There are different types of alimony in New Jersey that include:
- Pendente lite alimony – This is temporary alimony paid during separation (or during the divorce process) and before the divorce is finalized to help the lower-earning spouse with living expenses during the legal proceedings.
- Rehabilitative alimony – Rehabilitative alimony may be ordered for a set time period while the lower-income spouse looks for an appropriate job or, in the most likely scenario, takes the time necessary to gain education or training to become financially self-sustaining.
- Reimbursement alimony – Reimbursement alimony is spousal support that repays a spouse who supported the other one through an advanced education, with the expectation that he or she would benefit from the increased earning capacity afforded by that education.
- Limited-duration alimony – This type of alimony may be awarded typically in marriages under 20 years in duration, and it cannot exceed the number of years you were married.
- Open-durational alimony – Open-durational (previously called permanent alimony) alimony is typically awarded in marriages lasting more than 20 years and may continue until there is a change in circumstances that warrants its ending, such as remarriage of the receiving party or retirement at full retirement age of the paying party.
What type of alimony you may have to pay or may receive is very dependent upon your unique circumstances. When we learn the details of your marriage and divorce, we can guide you in understanding whether you may have to pay alimony, may be able to receive it and how much an alimony award may be and for how long.
HOW ARE ALIMONY PAYMENTS MADE?
How alimony payments are made can depend on what you and your ex agree to or on what the court orders. If you are not in agreement, the court may order alimony to be garnished from your paycheck or that of your spouse if they are the paying party.
Payments are typically made monthly or on another periodic basis. If you or your spouse do not get a regular paycheck, alimony may be paid on a lump-sum basis if you are both in agreement. Our New Jersey divorce attorney will work to help you achieve a payment arrangement that is beneficial to your individual circumstances and needs.
WHEN CAN ALIMONY PAYMENTS BE MODIFIED OR STOPPED?
If you or your former spouse have had a substantial change in circumstances after an award of alimony is established, you may be able to have the amount of alimony payments modified. Unless your spouse is agreeable, you will have to explain to and convince the court why the change is necessary. Some of the reasons the court may consider for reducing or even stopping alimony payments include the following:
- Permanent Job loss or involuntary reduction in income if self-employed
- Retirement of the payor
- Job gain or substantial gain in income by the payee
- The person receiving payments cohabitates in a marriage-like relationship
- The recipient remarries.
There are some qualifiers for these changes of circumstance. For instance, if you are a payor who is retiring but you have not reached full retirement age, the court will want to see evidence that your retirement was made in good faith and will look at factors such as your motive for retiring and the financial impacts to your ex, as just a couple of examples.
If you have lost your job, the court will look at whether it was involuntary, how long you have been unemployed, and the effort you have put into finding a comparable job. If you pay alimony and your ex is cohabitating, you could potentially have payments suspended or even terminated if you can prove that she is in a mutually supportive financial relationship with an intimate partner.
A New Jersey alimony attorney can help you understand whether your change in circumstances or those of your ex-spouse may warrant a reduction or termination of spousal support payments.
REACH OUT TO AN EXPERIENCED NEW JERSEY ALIMONY LAWYER FOR HELP
It can be frustrating to be ordered to pay alimony, especially if you feel your former spouse was underemployed during the marriage and is still not trying hard enough to earn an adequate income; or maybe you feel like you are entitled to alimony because you put your career aside to take care of children to the benefit of your family and didn’t have a chance to be financially self-supporting. Either way, we understand the feelings of distress and anxiousness around this topic and will walk you through it step by step (while giving you an education in the process).
Our knowledgeable alimony lawyer at Men’s & Fathers’ Rights Divorce Lawyers will strongly stand up for your interests in ensuring a fair payment with the goal of not wiping you out financially. And if you are seeking alimony in divorce, we can help you as well. Our firm also assists clients in having court-ordered alimony payments enforced. To learn more about how we can help you, call us today at (201) 880-9770 to arrange a consultation with a skillful family lawyer.