Financial disputes, especially those involving spousal support or maintenance, often lead to prolonged and contentious divorce proceedings. The issue is particularly vital, as divorcing spouses have to support two households on income that previously supported one.
To complicate the situation, both federal laws regarding how spousal support is to be handled tax-wise and Illinois laws regarding spousal support are changing. On January 1, 2018, two changes to Illinois divorce law went into effect concerning the statutory threshold and the length of spousal maintenance. The laws and their changes can be confusing and making mistakes can be costly, so it makes sense for divorcing couples to seek guidance from an experienced Illinois divorce attorney.
The seasoned and compassionate Illinois family law attorneys at Wolfe & Stec, Ltd., have extensive experience representing spouses in determining spousal support. Our attorneys are thorough and hard-hitting in protecting our clients’ financial interests, but still attempt to preserve relationships for divorcing couples co-parenting children. Whether you are seeking or opposing alimony in your divorce, we can ensure you get the best outcome possible. For a free initial consultation with a knowledgeable DuPage County spousal support lawyer, call our offices or contact us online.
Spousal support, also called alimony or spousal maintenance, is not awarded as a reward or punishment. It is based on need and is gender neutral, so both women and men may be eligible to receive it. It is desirable for both spouses to continue living at a standard that is similar to what they enjoyed while they were married. However, many spouses are not able to do so, often because they stayed home or worked part-time to take care of family, or they took lesser jobs to help their spouse’s career advancement.
The purpose of maintenance is to help the lower-earning spouse to manage financially and live in similar circumstances as when married. However, the supported spouse is expected to eventually become self-supporting and no longer need maintenance.
In the past, there were no clear guidelines that dictated the calculation of spousal support, and judges had discretion in determining amounts and duration. This changed on July 1, 2015, with amendments to the Illinois Marriage and Dissolution of Marriage Act (IMDMA).
The new law created a formula to determine maintenance for couples whose combined income was below the threshold of $250,000. This was changed on January 1, 2018, to a threshold of $500,000. For spouses with income over $500,000, decisions are made on an individual basis, considering factors such as each spouse’s age and health, income, assets, and earning ability.
1) Maintenance Amount
The formula for maintenance is as follows: (30% of the gross income of the spouse who will pay maintenance) minus (20% of the gross income of the spouse who will receive maintenance). This amount is divided into 12 monthly payments.
However, if the amount of maintenance is more than 40% of the couple’s combined gross income, the judge will again determine maintenance.
The length of time maintenance continues is also now determined by a formula as follows:
These changes mean maintenance awards are generally going to be larger, but usually won’t last as long as they used to. And the changes essentially do away with permanent maintenance for spouses of long-term marriages.
One of the provisions of the new Tax Cuts and Jobs Act removes the 75-year-old tax deduction for people making alimony payments. The new rules do not affect people who have divorced or signed a separation agreement before 2019, but if a couple’s circumstances change, the alimony situation can be readdressed and the new laws may come into play.
Under the current tax law, anyone paying alimony can deduct the monthly payments from their income. This can be a significant savings, especially for people paying large amounts of alimony. Under the new law, spouses will no longer have this federal tax deduction.
Also, under the current law, the spouse receiving the alimony payments had to pay taxes on it. The new law allows the spouse receiving the alimony to receive it tax-free, the same as money paid for child support. More money will go to taxes and less to future alimony recipients, who may wind up losing 10% to 15% of what they would get under the current law.
Divorce experts expect that the law changes will make divorce even more contentious in the future. However, if you finalize your divorce in 2018, you can still take advantage of the current favorable tax treatment of alimony.
Divorce and support negotiations are traumatic enough under the best of circumstances; the law changes can make your situation even more stressful. The compassionate and experienced Illinois divorce attorneys at Wolfe & Stec, Ltd., understand the pressures of divorce and recognize the concerns you have for your future and that of your children. We know the laws, the tax codes, the courts and the system and can guide you through the process. We represent and advise clients in all types of divorce matters and have a long history of success.
If you have questions about spousal support or any other family-law issue, we offer a free initial consultation to examine your individual situation and help come up with solutions that are best for you and your family.
Don’t delay, call or contact us online today to set up your free consultation.