Are You Being Pressed To Get Divorced Before The End Of The Year?
Maintenance Payments May Be The Reason!
As discussed in previous blog posts and expanded on further in a November article in the ISBA Family Law Journal written by Nancy Chausow Shafer and Margaret Bennett, maintenance paid pursuant to divorce orders entered after Dec. 31, 2018 will no longer be tax deductible to the payor and taxable as ordinary income to the recipient. This means the divorced couple will pay more income tax and have less disposable family income.
However, according to the new federal statute, if a written divorce or separation instrument that includes maintenance provisions (i.e., defined as either a court order, written separation agreement, or temporary order) is created prior to January 1, 2019, the maintenance paid pursuant that order or agreement will continue to be deductible to the paying spouse and taxable to the recipient spouse.
For cases filed after 2018, Illinois' new formula is 33 1/3 percent of the payor's annual net (not gross) income minus 25 percent of the recipient's annual net income with a spousal maintenance cap of 40% of the parties’ total combined net income.
If you have questions about the impact of State or federal law on future maintenance obligations please contact SAXE LAW LLC for a consultation.
