calculating alimony in new york state

Calculating Alimony in New York State

During a divorce, the most common stressor that runs through people’s minds is money.  Will there be enough to keep the house? The car? Health Insurance? Is there enough to support two households?  Who pays which bills?  The issue of money is a very emotional one and it causes many disagreements and can be very challenging to resolve.

Maintenance, formerly referred to as Alimony in New York, is a payment made from one spouse to the other over a pre-determined period of time.  Maintenance is not a guarantee as there are many factors the Court considers in making a determination to pay or not pay, both while the action is pending, and after its resolution.

How is maintenance calculated?

Calculating maintenance in New York is not a simple task.  Some factors that make determining an amount difficult include:

  • The Tax Reform Act of 2017 which was passed into legislation on 12/22/2017, eliminated the deduction of maintenance payments as taxable income on Federal returns effective January 1, 2019, it further stated any agreements executed on or before December 31, 2018 would remain taxable at the federal level. That led to a massive scramble to get agreements signed prior to December 31, 2018 to reap the benefits of taxable maintenance.  Being able to deduct maintenance from Federal taxes was previously a factor used in determining maintenance and is now a factor used in reducing the amount for maintenance based upon the inability to claim same.
  • However, despite the passing of the Tax Reform Act of 2017, New York still allows for the deduction of maintenance payments for payors and requires recipients to report payments as taxable income on their State tax returns.

Determining spousal maintenance requires artful negotiation, despite the implementation of the maintenance statute.

New York Maintenance Calculator

The statute for maintenance in New York was originally enacted in October 2010 and was most recently modified in October 2015, and January 2016.  There are two different ways to calculate maintenance in New York, which creates disagreements from the very start.  Each formula set forth below has three steps.

Method One – With Children –

Formula:

  • 20% of Payor’s Income –   25% of Payee’s Income = $________
  • 40% of combined income = $_______
  • The maintenance awarded is the lesser of the two figures. 

Method Two – No children

  • 30% of Payor’s Income – 20% of Payee’s Income = $________
  • 40% of combined income = $________
  • The maintenance awarded is the lesser of the two figures.

New York law also imposes an income cap, which is currently $184,000.00 and is set to be re-evaluated in January 2020. The income cap changes every two (2) years in accordance with the consumer price index.  An income cap means that if the payor or the combined income net income is more than $184,000.00, the maintenance calculation will be based on all income up to the cap of $184,000.00.  A person receiving support will likely find this to be unfair, especially in the higher income brackets, which leads to many disagreements and additional negotiations.  There are fifteen (15) enumerated factors the court may use to deviate and consider income over the cap.

On January 25, 2016 implemented into the maintenance statute were terms setting forth the duration of maintenance post-divorce.  Each duration being determined by the length of the parties marriage.

Proceed with Caution

Domestic Relations Law § 240 defines what is counted as income when calculating maintenance and child support. Income-producing assets such as a mutual fund, rental property, and stocks count as income and are part of the maintenance calculation.

In addition, New York allows divorcing couples to deviate from the amount of maintenance provided the two spouses can agree on an alternate amount.  Yes, even after calculations and income caps you can choose to bypass the result and come up with your own amount which is best suited for your family and prior standard of living.

This negotiation is most successful when done through attorneys, or the mediation process as money is always a hot topic between divorcing spouses.

This negotiation is most successful when done through divorce mediation.

Divorce Mediation or Litigation

At McCabe Coleman Ventosa and Patterson we aim to achieve a mutual and fair agreement by guiding individuals to reach a consensus.  Dan McCabe, Bernadette M. Davidson and Bianca Formisano have extensive financial knowledge surrounding maintenance and can help you determine an appropriate amount and duration. They will explore the facts specific to your case and assist you in determining what is best for you, your spouse, and your children.

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