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How Are Spousal Support Payments in Oregon Taxed?

Spousal support is intended to ensure both spouses have the financial means to adjust to their separate lives after the marriage ends. It is natural to have questions about spousal support, so enlist the guidance of an experienced and trusted Portland divorce attorney for more information.

NOTE: None of the following is or should be considered tax advice. Rather this blog post is merely general information about some tax consequences in general divorce proceedings. If you have any questions regarding taxes in your specific situation, you should talk to a CPA or other professional tax advisor.

Initiating the divorce process in Oregon can feel overwhelming. As you cope with the emotional aspects of ending your marriage, you must also make several critical decisions and engage in negotiations to ensure you begin the next phase of your life from a position of strength and stability. One of the primary considerations during your divorce is determining whether spousal support is necessary and, if so, which type of support the court will put in place. It is natural to have questions about spousal support, so enlist the guidance of an experienced and trusted Portland divorce attorney for more information. In the meantime, below is a brief overview of how spousal support works in Oregon and some of the implications these payments may have on your financial future.

The Goal of Spousal Support in Oregon

Spousal support, also known as alimony, is intended to ensure both spouses have the financial means to adjust to their separate lives after the marriage ends. Not all divorces result in a spousal support award, but those in which there is a substantial difference in income or earning potential often prompt the court to issue a spousal support order. The court may determine that one spouse must make payments for a limited amount of time, or it could require ongoing support with no defined end. When determining the terms of a spousal support order, the court considers several factors, including the duration of the marriage, the standard of living enjoyed by the spouses during the marriage, the income and earning potential of each spouse, the age and health of both spouses, and other relevant information.

The Three Main Types of Spousal Support in Oregon

Oregon recognizes three types of spousal support: transitional support, compensatory support, and maintenance support. The court will explore several factors to determine which type of support best suits the divorcing couple’s needs.

Transitional Support

In some divorces, one spouse may need financial help adjusting to their newly independent life. For instance, if one spouse puts their career on hold during the marriage to focus on maintaining the home or raising children, they may need financial help to attend training or education classes to reenter the workforce. In such instances, the court may order a transitional spousal support order that lasts for a set period of time. Once sufficient time has passed for the spouse to have completed the training or classes, the transitional spousal support payments will cease.

Compensatory Support

Compensatory support is not used very often, but it is intended to compensate one spouse for their financial contribution to the other spouse during the marriage. For example, if one spouse helped to pay for the other spouse’s education or financially supported their partner through medical school or law school, the court may order the spouse who benefitted from this arrangement to pay compensatory support to the other party. Compensatory support often takes the form of a one-time payment, as it is simply the repayment for one spouse’s significant economic contributions to their partner’s career and financial future.

Maintenance Support

Maintenance support may be appropriate in divorces where there is a significant difference in the spouses’ earning capacities. The goal of maintenance support is to ensure both parties continue to enjoy a standard of living similar to the one they experienced during the marriage. In many cases, maintenance support remains ongoing with no set expiration date. Another example where maintenance support may be appropriate is if the health of one spouse prevents them from finding stable employment.

Tax Implications for Spousal Support in Oregon

Before the end of 2018, the party responsible for paying spousal support was able to take a tax deduction for these payments. However, when Congress passed a sweeping tax plan at the end of 2017, it made considerable changes to divorce settlements and spousal support issues. As of January 2019, any new court order that includes a spousal support provision prevents the party paying spousal support from deducting this amount on their returns. In addition, the party receiving spousal support does not have to claim the support payments as income on their tax returns. If done correctly, those seeking to modify a spousal support order that went into effect before 2019 will be able to maintain the tax consequences of paying and receiving support that existed in the original divorce judgment.

Your Divorce and Spousal Support Questions, Answered

Facing the end of your marriage is not easy. As you navigate the divorce process, consider working with a dedicated and understanding Portland divorce attorney to support you during this challenging time. Your attorney can answer your questions, address your concerns, and help you achieve your divorce goals. Together, you can take steps to ensure that you lay a stable foundation to enjoy during this next chapter of your life. Reach out to an experienced attorney today to get started.

 

Reach out to Kuzma Law, LLC, today at (503) 406-1787 to discuss your situation with a trusted Portland divorce attorney.