Under the new federal tax law, can no longer deduct your alimony payments on your federal income tax returns.
So, if you’re separated or considering divorce, it’s important to know what kind of potential alimony obligation you might be facing, if any.
The vast majority of divorce cases in New Jersey is settled out of court without ever going before a judge.
But these agreements still need to include properly drafted alimony provisions that conform to New Jersey law.
How do you know if you’ll have to pay alimony?
Generally, you could have to pay alimony if your spouse was financially dependent on your earnings during the marriage.
Sometimes the answer is not so clear. An experienced divorce and family lawyer could advise you if New Jersey alimony law would require you to pay alimony to your spouse.
How much alimony can you expect to pay under the new federal tax law?
Unlike child support, there is no software program that calculates alimony in New Jersey.
Rather, New Jersey alimony law lists several factors to be considered when determining the appropriate amount of alimony. These include the actual need and ability to pay, the age and health of each spouse, and each spouse’s earning capacities and educational levels.
But there’s still a way to get an idea of how much alimony you might expect to pay.
Alimony amounts are now generally much lower to make up for the lack of federal income tax deduction. And under a general “rule of thumb,” the amount of alimony is calculated as roughly 25% of the difference between the gross incomes of each spouse.
This rule of thumb really only works, however, when both spouses are close to a blended federal tax rate of about 25%. It should also be measured against the alimony factors to see if the calculated figure makes sense in your particular circumstances.
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