Is there a way to negotiate Alimony to take advantage of the tax consequences?
Yes. Unlike child support – which (subject to parents earning in excess of $187,200 net annually), is calculated according to the New Jersey Child Support Guidelines – alimony is negotiable in your divorce. Spouses can use this flexibility to minimize their overall tax burden once their marriage has been dissolved or optimize the amount of money they receive monthly in alimony from a supporting spouse.
For example, if one spouse is in a higher tax bracket than the other, structuring alimony payments so that the spouse in the higher bracket can take deductions while the spouse in the lower bracket pays tax can be of benefit to both parties. Dependency deductions, head-of-household filing status, and other considerations can also be used to optimize the tax consequences of everyone involved in your case. We recommend working with a tax accountant who can help you thoroughly address these issues during your divorce as we are not accountants and do not know all of the possible mechanisms that you may be able to utilize and take advantage of.
If you are seeking additional information about alimony in New Jersey, you can reach our offices in Hackensack by calling 201.968.5700.