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Santa Clara County alimony attorney tax lawsThe Tax Cuts and Jobs Act has been a major topic of discussion over the past year, and many people have been affected, whether positively or negatively, by the changes implemented in this law. Those who are in the midst of a divorce case or completed their divorce in the past year will need to understand whether they must file their taxes differently than in the past. In addition, alimony tax laws have been altered drastically, and this has resulted in increased conflict in many cases.

Spousal Support/Alimony Taxes

New laws have changed the way both payors and payees of spousal support claim these payments on their taxes. Those who pay alimony will no longer be able to deduct the spousal support from their taxable income, and those receiving it will no longer have to claim it as taxable income unless the parties otherwise agree. This may not have a large impact on some spouses, but for those in high-asset divorce situations, the money gained or lost could be significant, to say the least.

According to CNBC, the “divorce subsidy” that was previously available was responsible for saving some of California’s top earners as much as 50 percent in taxes. Those savings were enough of an incentive for many people to agree to more spousal support and settle their divorces out of court. Without this incentive, high-asset divorces may be more complicated and drawn out, and the payors of spousal support will be more likely to try to work out deals that will benefit themselves rather than their soon-to-be-exes.

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Los Gatos, CA divorce alimony attorneyOne of the trickiest issues to negotiate in a divorce can be the matter of spousal support, or alimony. When a couple has enjoyed a comfortable standard of living for many years, with one party being the primary income provider and the other taking primary responsibility for home and family needs, the issue of spousal support can be as important as the division of assets and retirement savings.  

When a couple is unable to reach agreement on the question of spousal support payments, and the couple does not have a premarital or postmarital agreement that addresses the subject, then a judge must decide whether to order spousal support and, if so, in what amount. This is a very complex decision, requiring the court to study not only the couple’s assets and debts but also their lifestyle, occupational skills, income-earning capacity, childcare needs, and more. 

Note that this article will discuss only “permanent” spousal support,” that is, payments that will be made by one party to the other after a marital settlement agreement has been finalized. This is separate from the “temporary” spousal support that may be required while a divorce is pending. 

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Los Gatos spousal support lawyerWhen a couple gets divorced, the higher-earning spouse may be required to pay spousal support to a non-working or lower-paid spouse for some period of time after the divorce. This is called “permanent” spousal support, as opposed to the “temporary” spousal support that may be paid while a divorce is pending. 

However, do not let the term “permanent” confuse you. So-called “permanent” spousal support will not necessarily be for the rest of your life. Its duration will depend on several factors, including the length of the marriage and the ability of the supported party to become self-supporting. In fact, Section 4320 of the California Family Code states that a supported spouse is expected to become self-supporting “within a reasonable period of time.” 

Length of Marriage Affects Duration of California Spousal Support 

The duration of the marriage is a major factor in determining the duration of spousal support. If a couple has been married for less than 10 years, a “reasonable period of time” is generally defined as one-half the length of the marriage. For example, if a couple was married for six years, the court would typically award spousal support for no longer than three years. However, the court has total discretion to order support for a longer or shorter period of time based on the totality of the couple’s circumstances.

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Santa Clara County permanent alimony attorneyWhen a couple decides to divorce, one issue that can be difficult to negotiate is the payment of spousal support, also known as alimony. You might think that a high-earning spouse will automatically have to pay monthly support to a spouse who has not been earning a paycheck or whose earnings have been substantially lower. However, California law on this issue is fairly complex. 

While child support payments are determined by state-mandated guidelines, and there is a basic formula used to compute “temporary” spousal support payments that may be required while a divorce is pending. However, there is no simple formula for post-divorce, “permanent” spousal support payments. (“Permanent” is in quotes because the duration of support payments will be defined in the final settlement agreement. The agreement could, for example, require payments for the supported party’s lifetime, until their remarriage, or only for a specific number of years.)

Generally speaking, the objective of temporary support is to enable each party to maintain the standard of living established during the marriage. However, Sections 4320-4339 of the California Family Code provide a long list of factors that the court must consider when deciding whether to order permanent spousal support, in what amount, and for what length of time.

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Los Gatos, CA temporary alimony lawyerMany married couples choose to have one spouse be the primary income earner while the other spouse attends school, develops a new business venture, manages family and household needs, volunteers in the community, works on a part-time basis, or works in a rewarding but low-paying job. However, in the event of a divorce, this can leave the non-wage-earning or lower-paid spouse in a difficult financial position. Thus, the question of temporary spousal support can be an important factor to consider before filing for divorce. 

Standard Calculation for Temporary Spousal Support in Santa Clara County

When one spouse files for divorce, either spouse may ask the court for a temporary support order. Such decisions need to be made quickly to ensure that one spouse is not left destitute. Therefore, most judges use a standard formula to calculate the amount of monthly temporary support to be paid. 

In Santa Clara County, for example, the standard formula is:  (40% of the net income of the higher-earning spouse minus child support expenses) minus (50% of the net income of the lower-earning spouse). 

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