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Tax issues with alimony

Alimony is taxable to the person who receives it and tax-deductible by the person who pays it. Some creativity can be used to offset the higher tax bracket of the paying spouse with the lower tax bracket of the recipient to end up with more dollars in the pockets of both spouses.

Alimony: modifiable and non-modifiable

It is common to see a final divorce order that specifies how much alimony is to be paid. It may not specify now long it is to be paid. In this case, either spouse can come back at any time and ask that the alimony be modified - either up or down. A wife may need more or continued alimony and the husband may wish to have it lowered or stopped completely.

Non-modifiable alimony means just that. The divorce decree will state how much and how long and nobody may change it later. This may create a hardship on either party in the case of a disabiltiy. It also means that the alimony has to continue even if the receiving spouse gets married before the end of the agreed upon term.