Am I eligible for alimony?

In North Carolina, you must show that you are a dependent spouse in order to be eligible for alimony. That means you make less money than your spouse. You must show that you are actually and substantially dependent upon your spouse for maintenance and support, or that you are substantially in need of maintenance or support from your spouse. ( N.C.G.S. § 50-16.1A(2) ). If you are the spouse that makes more money in the relationship, you are the supporting spouse, and not entitled to alimony in North Carolina. Besides dependency, the court can consider fault in making a determination of an alimony award. The #1 area of fault is adultery, or “marital misconduct” under the statute. If you are the supporting spouse, and you committed adultery during the marriage, the law says you shall pay alimony. If you are the dependent spouse, and you committed adultery during the marriage, the law says you shall not receive alimony. If both spouses cheated, it is in the court’s discretion as to whether or not alimony may be awarded. Besides adultery, there are several other areas of fault that can be considered, such as alcohol and drug abuse of one party, physical abuse, when one spouse makes the living situation so bad that the other spouse is forced to move out (i.e. abuse), extreme verbal abuse (“indignities”), abandonment, reckless spending of income, failure to provide financial support such that it makes life burdensome for the other spouse.

The amount and length of alimony the can be based on many factors. Generally, the court will look at whether or not there has been any fault of either spouse; the length of the marriage; the earnings and earning capacity of each spouse; the ages, physical, mental and emotional conditions of each spouse; the standard of living during the marriage, and several other factors that help the court make its decision about the amount a length of alimony. This is the most difficult part of any divorce, because as attorney’s we can only guess based on our experiences, how much an alimony award will be and how long it will last. However, there is a growing trend toward “rehabilitative” alimony in North Carolina. That means, some judges are giving a higher award of alimony for a shorter period of time to allow the dependent spouse to “get back on their feet,” and often to allow that person to obtain employment or to allow time for teenage children to graduate from high school and move out of the marital residence.

One of the other things considered when making an alimony award is the tax consequences of alimony. The person paying the alimony will receive a tax deduction for the alimony payment, while the person receiving the alimony will have to report the alimony he or she receives as income on their taxes. So, when determining your reasonable monthly expenses and what you need in alimony in order to continue paying the bills, we will “gross up” the actual payment to take into consideration that you will be paying taxes on the alimony you receive.

We will also consider whether or not you will be subject to the alimony recapture rule under the tax code. In order to keep a property settlement from being disguised as alimony, the federal tax code requires that when alimony amounting to over $15,000 is paid in the first or second year after the parties divorce, but drops significantly in the third year, a portion of the alimony that was deducted by the payor in the first 2 years is recaptured by being added back to the payor’s taxable income in the third year. If recapture applies, then the payee spouse (the one receiving the alimony, and had to initially include the alimony payments in their income those first 2 years) is entitled to a corresponding deduction in the third year.

The rule does not apply to alimony paid under temporary support orders issued by the Court (i.e., before the final judgment of permanent alimony is issued) nor does it apply when the reason for the drop-off in alimony in the third year was that the recipient died or remarried, or that less alimony was paid because the amount of alimony was based on a fixed portion of the payer's income from a business, property, or other compensation.