Alimony in Tennessee: 2018 and beyond
Tennessee divorce and alimony, how does it work?
Tennessee state law defines alimony as a payment made from one spouse for the benefit of another as a result of an action for divorce, legal separation or separate maintenance. Many states throughout the country allow for alimony, or spousal support, payments following divorce. Each state has different rules regarding these payments and modifications. This piece will focus specifically on alimony and divorces in Tennessee.
Is alimony allowed in Tennessee? Tennessee allows for the payment of alimony. Courts will determine alimony payments when couples cannot do so on their own. In these situations, courts are to consider all relevant factors in an alimony determination, including:
- Earning capacity
- Education of each party
- Duration of mage
- Age, mental and physical condition and overall health of each party
- Standard of living
- Tax considerations
The court also clarified in Gonsewski v. Gonsewski that the most important factors were the “disadvantaged spouse’s need and the obligor spouse’s ability to pay.” The Tennessee Bar Association, a group of legal professionals from throughout the state, also note fault plays a key role in alimony determinations.
How does alimony work in Tennessee? Tennessee state law provides for four different types of alimony: alimony in solido, rehabilitative alimony, alimony in future and transitional alimony.
Alimony in solido, or lump-sum alimony, results in one spouse providing the other with a single large or monthly payment. The court may grant alimony in solido on its own or in addition to one of the other forms of alimony.
The courts may also grant rehabilitative alimony as a means to support a spouse until he or she can become self-sufficient. If this is not likely, the court may award alimony in future or periodic alimony. The court may grant the fourth option, transitional alimony, for a set period of time while the spouse that receives payments adjusts to post-divorce life.
What are the tax implications of alimony? The Tax Cuts and Jobs Act (TCJA) directly impacts alimony. Essentially, the Internal Revenue Service (IRS) will apply the previous rules for divorces finalized before or during 2018. Those finalized during or after 2019 will apply the rules as set out by the TCJA.
Currently, the law allows the obligor spouse to take a tax deduction for alimony payments and the spouse receiving the payments is required to report these payments as income. The TCJA removes this deduction. Instead, the obligor spouse pays income tax on the alimony payment and does not receive a deduction. In exchange, the spouse that receives the alimony payment no longer must account for this payment as income.