Alimony or spousal support is a flexible financial tool for divorcing couples because it offers tax advantages that can help put more cash in the pockets of both spouses.

Alimony is designed to provide the lower-income spouse with money for living expenses over and above the money provided by child support. Alimony is different from child support. Where child support is a simple mathematical calculation using guidelines published by the jurisdiction, alimony is very much at the discretion of the judge.

A judge considers many factors when deciding whether or not to grant alimony. These differ from jurisdiction to jurisdiction of course, but they usually involve the parties' relative ability to earn money, both now and in the future; their respective age and health; the length of the marriage; the kind of property involved, and the conduct of the parties. In general, about the only time a judge will award alimony in most states is where one spouse has been economically dependent on the other spouse for most of a lengthy marriage.

Alimony gets treated differently from child support for tax purposes. Alimony is tax deductible to the person who pays it, and included in the taxable income of the person who receives it. Child support, by contrast, is not taxable to the person who receives it and not tax deductible to the person who pays it.

When one spouse has a significantly higher income than the other, there may be some tax advantages to using alimony, even if a judge wouldn't ordinarily award it. For example, Rufus and Rhonda realize early in their negotiations that alimony might make sense for them. Rufus's income of $175,000 made every deduction precious to him, and on her $23,000 schoolteacher's salary, Rhonda had a substantially lower tax rate. If Rufus could claim the support he paid as alimony, he could afford to pay Rhonda more than enough to compensate her for the extra tax she would have to pay, and still come out ahead.