One of the most common misunderstandings we come across in our initial consultations with clients who have divorce cases is an assumption that Arkansas is not an "alimony state." To be certain, Arkansas is an "alimony state" - meaning, the Court can award alimony in a divorce case. Alimony and spousal support are identical - there is no distinction in the law.
Alimony is one of the most difficult things for an Arkansas divorce lawyer to predict. The legislature has not provided the courts with any fixed rules regarding alimony; rather, the decision to award alimony (including the amount, the duration, and whether to award it at all) is completely within the discretion of the judge.
Alimony is generally categorized into one of two groups: rehabilitative or permanent. Rehabilitative alimony is support ordered by the court to provide a more disadvantaged spouse (such as a stay-at-home parent who hasn't had the opportunity to obtain degrees or professional licenses because they have been caring for the children while the other parent has remained employed and earned success in her profession) with a chance to get back on their feet before they must care for themselves with only their own income. It is usually for a limited amount of time, typically anywhere from six months to five years (though sometimes longer), and it ends at the time it's set to expire, or upon the death of the spouse who receives the support, or upon the receiving spouse's remarriage or cohabitation.
Permanent alimony is support for the more disadvantaged spouse for the remainder of his or her life, or upon the death of the spouse who receives the support, or upon the receiving spouse's remarriage or cohabitation. Alimony of this type is typically seen when a couple has been married for many years, and they are getting closer to the age of retirement.
Alimony is generally calculated by looking at two factors: (1) the need of the receiving spouse, and (2) the ability to pay of the paying spouse. Need is generally determined by subtracting monthly expenditures from monthly income (which includes other support that spouse may receive, such as child support). If a receiving spouse's reasonable expenses exceed his or her income, the court would then find that there is a need. The judge would then look at the paying spouse's income and expenditures to determine just how much of that spouse's earnings should be taken and given to the other spouse. Again, the legislature in Arkansas has not given the courts a whole lot of assistance in making these calculations, and the vast majority of alimony determinations are left completely within the discretion of the judge.
When making decisions about settling a case and paying alimony, or after a judge has ordered someone to pay alimony after a trial, it is always important for both parties to understand the tax implications of alimony payments. Alimony is taxed as income to the paying spouse - meaning the paying spouse does not enjoy any tax deductions for alimony payments. This has an impact on the paying spouse's financial future, and must be taken into consideration when going through the process of resolving any divorce case.
When making decisions about settling a case and paying alimony, or after a judge has ordered someone to pay alimony after a trial, it is always important for the paying spouse to understand the tax implications of alimony payments. Alimony is considered an "above the line" deduction - meaning, it is taken directly off of the paying spouse's gross income, and the payor pays no taxes on that income. Rather, the receiving spouse must count alimony payments as income and pay taxes accordingly. Since there is no wage withholding with alimony, receiving spouses can find themselves in trouble when it comes time to file their income tax returns each year.
Issues of alimony or spousal support can have far-reaching implications on the lives of both parents and children. You need an attorney who understands this aspect of Arkansas law, and can give you the right advice to make sure that you and your family are protected. Rhoads & Armstrong can help. Please call 479-254-0135 for a confidential consultation or connect with us via our online contact form.