How Do You Calculate Alimony in Colorado?

Spousal maintenance, commonly referred to as alimony or spousal support, is meant to get the lower-earning spouse back on their feet after the divorce. Colorado courts aim to balance the receiving spouse’s needs versus the higher-earning spouse’s ability to pay. If you are considering divorce, it’s important to understand how spousal maintenance is determined in Colorado.

Bottom Line

Colorado courts calculate spousal maintenance depending on both spouses’ combined income levels and the tax deductibility of the maintenance.

 

Calculating Spousal Maintenance

Colorado courts use a set of guidelines, created by state lawmakers, to determine an appropriate spousal maintenance award. The guidelines call for courts to consider factors like each spouse’s income and how long the couple was married. However, the maintenance guideline is just that – a guideline. It is not necessarily set in stone, but it absolutely is the starting point for every spousal maintenance case.

Colorado Adjusted its Alimony Calculation for New Tax Law

Until December 31, 2018, the spouse who paid alimony could deduct all of the maintenance they paid on their income taxes. The spouse who received alimony had to claim the payments as income on their taxes.

Now, for divorces finalized on or after January 1, 2019, the paying spouse can no longer claim a deduction, and the receiving spouse does not have to claim alimony as income. 

To account for this shift in the tax burden, state lawmakers adjusted how it figures alimony. 

Note➤ State law does not provide direction for incomes greater than $20,000 a month. However, there are a number of factors courts consider for high income earners, and we’ll delve into those further into the article. 

Colorado Spousal Maintenance Calculation

Colorado courts take 40 percent of the divorcing couple’s combined monthly adjusted gross income (AGI) and subtract from that the lower-earning spouse’s monthly AGI. 

This was the calculation for divorces finalized before January 1, 2019. Today, the state guideline still uses this calculation, but then it reduces the resulting amount based on how much the spouses make each month. 

Let’s break this down step by step. 

Step One

Calculate the spousal maintenance payment.

Calculate 40 percent of the parties’ total combined monthly adjusted gross incomes, then subtract from that the lower party’s monthly adjusted gross income.

Step Two 

Reduce the resulting payment based on the spouse’s combined monthly AGI.

$10,000 or less – reduce by 20 percent 

$10,001 to $20,000 – reduce by 25 percent
C.R.S. § 14-10-114 (3)(b)(I)(B)-(C)

Let’s look at some examples. 

Example One

Todd and Jane’s divorce was finalized in August 2020. Todd’s monthly adjusted gross income is $1,300. Jane’s monthly AGI is $7,200. 

$1,300 + $7,200 = $8,500

$8,500 x .40 = $3,400
$3,400 – $1,300 = $2,100 maintenance payment

Because Todd and Jane’s divorce occurred after 2018, the resulting alimony payment is reduced. 

Since the spouses’ combined monthly AGI is $8,500, the guideline calls for a 20 percent reduction.

$2,100 x .20 = $420 reduction in payment

$2,100 – $525 = $1,680 

In this example, the court would likely order Jane to pay Todd $1,680 a month in alimony. 

Example Two

Susan and Jason’s marriage ended in 2019. Susan’s monthly adjusted gross income is $6,400. Jason’s monthly AGI is $12,000. 

$6,400 + $12,000 = $18,400

$18,400 x .40 = $7,360
$7,360 – $6,400 = $960 maintenance payment

Because Susan and Jason’s divorce occurred after 2018, the resulting maintenance payment is reduced. 

Since the spouses’ combined monthly AGI is $18,400, the guideline calls for a 25 percent reduction.

$960 x .25 = $240 reduction in payment

$960 – $240 = $720 

In this example, the court would likely order Jason to pay Susan $720 a month in maintenance. 

What About Maintenance for Higher Earners?

If both spouses’ combined adjusted gross annual incomes exceed $240,000, the above formulas do not apply. Instead, the court must instead consider the following factors:

• the financial resources of both spouses
• the lifestyle during the marriage
• the distribution of marital property
• each spouse’s income, employment, and employability
• the income each spouse has historically earned
• how long the marriage lasted
• the amount and term of temporary maintenance
• the age and health of the parties
• significant contributions to the marriage or to the advancement of the other spouse
• whether the parties’ circumstances warrant a nominal amount of maintenance
• the tax consequences of the maintenance award to both parties; and
• any other factor that the court deems relevant.

C.R.S. § 14-10-114(3.5) and (3)(c)

If one spouse earned a seven-figure income, for instance, while the other stayed at home during the marriage, the working spouse will likely be on the hook for maintenance post-divorce.

Age and health also factor heavily into maintenance calculations in high-asset divorces. If a retired couple is divorcing and the wife did not work during the entire marriage, it is unlikely she will enter the workforce in her mid- to late-60s. Therefore, she will probably require spousal maintenance to meet her reasonable needs – possibly for the rest of her life.

In cases like this, your attorney will often calculate the amount of maintenance that would be awarded for a couple making less than $240,000 and submit this calculation to the court to give the judge an idea of what maintenance should be.

Call a Family Law Attorney Today

Calculating spousal maintenance is complex, and any mistakes could haunt your finances for the rest of your life. Call 303-688-0944 today to begin your case assessment with one of R&H’s award-winning family law attorneys.