Alternatives to Monthly Alimony Payments in a Maryland Divorce

Maryland doesn't allow a lump sum support payment for alimony, but there is nothing to prevent the parties from inserting an amount in a Marital Settlement Agreement that is intended to substitute for alimony or support and then having both parties waive their future right to alimony or support. In this case, the "settlement" amount would not be taxable to the receiver.

The Other Side of the Coin: If You Receive a Lump Sum Payment

If you accept a lump sum alimony payment, you may face tax consequences. For example, if you receive a lump sum payment that's referred to as "alimony" in your divorce decree, you may be subject to taxes on the full amount for that year. But if the same payment is called a "settlement," you may not be taxed. You should consult with a tax accountant before agreeing to a settlement amount in your Marital Separation Agreement.

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