These two screens represent two sensible, rational ways to calculate a fair alimony amount.
As such, they can be a very valuable tools in the negotiation process.
General Approach
The general approach is that you specify a target (either in dollars or percents), and the software tells how much alimony is needed in order to enable the party or parties to reach the target.
Meet Recipient Need
On this page, you specify a target after-tax income for the recipient, and the software calculates the amount of alimony that will enable the recipient to reach that point.
The focus, here, is on the recipient.
But the graph and numbers will show the result for both parties, so you can see whether the outcome is fair to the payer as well as the recipient.
If alimony is taxable/tax-deductible, which would typically apply if the agreement was entered into before 2019, the software will account for all tax effects.
If the result is zero, then the recipient party has reached or passed the desired threshold with no alimony payment.
Balance Incomes
This page aims to enable you to set alimony at a level that results in a fair split of the parties’ after-tax incomes.
This calculator looks at both parties, and their relationships to one another.
Here’s how it works:
It starts by calculating the after-tax income of both parties.
That is, it takes each party’s gross income and calculates and subtracts taxes for each party.
It then adds the two parties’ after-tax incomes together to get a total.
You can think of this total as being a pot of after-tax funds.
Suppose that, with no alimony, the recipient’s income after taxes would constitute 10% of this pot.
The parties may feel that the recipient should end up with 50% of this pot.
How can you even things up?
With alimony.
The alimony payment increases the recipient’s share of the pot and decreases the payer’s share of the pot.
In this case, you would type “50” in the entry field on this screen, because the target is 50%.
The software would then calculate the amount of alimony that would be needed in order to have the recipient end up with 50% of this pot (and the payer end up with the remaining 50%).
This is a way of setting an alimony amount that seems equitable considering the incomes of both parties.
Note that it does not look at all at the expenses of the parties.
If one party has much larger expenses, that party may still end up in a significantly worse situation than the other party, even if the target percent is 50%.
Note that the target does not have to be 50/50. You can set the target at 60/40 or any other ratio you like.
If the result is zero, then the recipient party has reached or passed the desired threshold with no alimony payment.
Report Options
There is a section on the screen that sets report options.
The most important of these is the option to keep child support in sync with spousal support.
In a number of states, spousal support paid and spousal support received are factors in the computation of child support.
As spousal support changes, child support changes as well.
If you are in one of those states, the software will, by default, automatically change spousal support as child support changes.
It will compute the amount of spousal support that is needed, taking into account the change in child support.
This is a very valuable feature.
Please be sure to click the “Options” button. There are several options, which are explained in help bubbles on-screen.
Expenses to Count in the Calculation of Income After Taxes
The concept of “income after taxes” is to show income after non-discretionary expenses.
Taxes are certainly a non-discretionary expense.
So are some of the other items listed, including union dues and mandatory retirement contributions.
You may specify other items to be included in this calculation.
The more such items you include, the closer you get to the concept of “income after non-discretionary expenses.”
The fewer such items you include, the closer you are to purely “income after taxes.”
Graph
The graph on the page shows two sets of numbers.
The two columns on the left show each party’s gross income.
The two columns on the right show each party’s gross income after child support, spousal support, and taxes.
The two columns on the right show the effect of child support and spousal support on bringing the two parties incomes closer together.
Additional Columns
If you wish to show multiple scenarios on the same screen, click the button labeled “Show Another Column.”
We show the graph, however, only if there is only one column, so when you create a second and additional columns, the graph will disappear.