Estimate monthly alimony (spousal support) based on income difference, length of marriage, and common state formulas.
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A Texas-based freelance graphic designer earns $140,000 net profit/year from client work. She's evaluating whether to stay as a sole proprietor, form an LLC, or elect S-Corp status to reduce self-employment taxes.
Takeaway: S-Corp saves $8,300/year but adds ~$1,500-$3,000 in accounting fees (payroll, extra returns). Break-even is around $80-90K net profit. Below that, the overhead eats the savings. Texas has no state income tax, so the benefit is purely federal SE savings.
LLC annual fees range from $0 (Ohio) to $800 minimum (California, even for zero-revenue LLCs). Delaware C-Corp is standard for VC-backed companies but adds registered agent costs (~$300/yr) for out-of-state entities. The "best" structure is state-specific.
S-Corps cannot have more than 100 shareholders, cannot have non-US shareholders, and cannot have corporate shareholders. Violating these rules (e.g., adding a foreign investor) terminates S-Corp status retroactively, potentially creating a large unexpected tax event.
The IRS requires S-Corp owner-employees to pay themselves a "reasonable salary" before taking distributions. There is no fixed formula — the IRS looks at industry benchmarks, duties, and hours worked. Setting the salary too low is a common audit trigger for S-Corps.
Business break-even models track revenue vs. direct costs. They rarely factor in the owner's time as a cost. If you're working 60 hours/week at imputed $50/hour, your "profitable" business may be paying you $12/hour after the opportunity cost calculation.
Break-Even CalculatorA service business valued on EBITDA multiples (2-4×) gets a very different number than one valued on SDE (seller's discretionary earnings) or discounted cash flow. Buyers and sellers typically use different methods to argue their preferred price. This calculator uses a single method.
Business Valuation CalculatorBased on your inputs
6.7 duration
| Payer Monthly Income | $8,000 |
|---|---|
| Recipient Monthly Income | $3,000 |
| Monthly Income Difference | $5,000 |
| Estimated Monthly Alimony | $1,800 |
| Estimated Annual Amount | $21,600 |
| Estimated Duration | 6.7 |
| Estimated Total Payout | $144,000 |
Alimony is determined by a judge. This estimate is for planning purposes only.
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There's no single federal formula. Most courts consider income difference, length of marriage, standard of living, each spouse's earning capacity, and contributions during marriage.
Short marriages (< 5 yrs): alimony may not be awarded. Medium marriages (5–15 yrs): often 1/3 to 1/2 the marriage length. Long marriages (15+ yrs): potentially indefinite (until death or remarriage).
For divorces finalized after 2018: alimony is NOT deductible by the payer and NOT taxable to the recipient (TCJA change). Pre-2019 divorces follow old tax rules.
Yes. Either party can petition the court for modification if there's a substantial change in circumstances such as job loss, remarriage, or significant income change.
Alimony supports the lower-earning spouse after divorce. Child support covers children's needs and is calculated separately. Both can be ordered simultaneously but serve different purposes.
In some states, adultery can reduce or eliminate alimony for the unfaithful spouse. However, many no-fault divorce states do not consider marital misconduct when determining spousal support amounts.
Rehabilitative alimony is temporary support designed to help the lower-earning spouse gain education, training, or job skills to become self-sufficient. It typically has a set end date tied to specific goals.
Yes. Some divorces settle alimony as a one-time lump sum payment instead of ongoing monthly payments. This avoids future modification disputes but requires careful negotiation of the total amount.
In most states, the recipient's cohabitation with a new partner can be grounds to reduce or terminate alimony. The payer must typically prove the new relationship reduces the recipient's financial need.
Permanent alimony provides ongoing support until the recipient remarries or either spouse dies. Courts typically award it after long marriages of 20 or more years when the recipient cannot become self-supporting due to age, health, or limited work history.
Standard: 30% Payer Income − 20% Recipient Income
Duration: typically 1/3 to 1/2 the length of marriage
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.