Asking for Spousal Maintenance Is About to Become More Difficult

Posted on in Spousal Support

Rolling Meadows alimony attorney tax issuesGetting divorced may be the right move for the health and happiness of both spouses, but financially, this decision can be devastating. The divorce process itself is expensive for many couples, and rearranging finances after years of sharing responsibility is no easy task. Making this transition is extremely difficult for all spouses, but those facing financial disadvantages are at risk of suffering irreparable fiscal damage by leaving the marriage. Spouses in this situation may have the option of asking for spousal maintenance (formerly known as alimony) from the other spouse if his or her financial means are more lucrative and stable.

Spouses who are returning to work after years or decades of absence will likely struggle to maintain an acceptable standard of living post-divorce, and decisions about spousal maintenance are frequently settled via negotiation or mediation. However, resolving this matter is about to get much more complicated and volatile, as a new tax law goes into effect on January 1, 2019, that will completely upend the treatment of spousal support. This change will greatly disincentivize a paying spouse from agreeing to this support, and it will greatly increase the likelihood of litigation to determine whether alimony will be required. 

Tax Changes

Paying spousal maintenance is a significant financial burden for most people. Under the current tax laws, a person may deduct alimony payments from their federal income taxes, thereby reducing the payor’s overall tax liability. The former spouse receiving spousal support is currently required to report this money as income.

For divorces finalized on or after January 1, 2019, the ability to deduct alimony from the payor’s taxes will no longer be available, and the recipient will no longer be required to report spousal support payments as taxable income. Consequently, the spouse being asked to pay will lose a huge benefit and incur a higher cost to provide the support. Hence, the need for litigation to determine the need for spousal maintenance will likely increase.

Asking for Alimony

The basic purpose of spousal maintenance is to allow both spouses to maintain their standard of living following divorce, allowing the recipient to meet his or her needs while he or she obtains education or training and finds employment. Thus, need and an ability to pay must exist before a court will consider the amount and duration of an alimony award.

A judge is given a long list of factors to assess whether alimony is justified, and these are principally related to each spouse’s financial situation and earning capacity. In addition, the Illinois Legislature recently passed a new law updating the guidelines for the calculation of maintenance to address the impact of the new tax law. For couples that collectively earn less than $500,000 per year, formulas based on both spouses’ incomes and the length of the marriage are used to determine how long the spousal support will last and the amount of maintenance payments.

Note that for marriages lasting less than 20 years, spousal maintenance will almost always be temporary, lasting for a certain percentage of the length of the marriage. Regardless, the new changes in the federal tax law, when coupled with the updated formulas for calculating spousal support, will present divorcing couples with additional challenges that an experienced divorce attorney is best equipped to help alleviate.

Contact a Hoffman Estates Divorce Lawyer

It can be difficult to recover from the financial adjustments that must be made during and after divorce, and spousal maintenance is a necessary component of this shift for many spouses. If you are heading for divorce and have any questions about the type of spousal support or property settlement you could receive, speak with dedicated Mt. Prospect spousal maintenance attorney Nicholas W. Richardson about your legal options. Your long-term financial health depends upon the outcome of your divorce. Contact our law firm at 847-873-6741 for a free consultation.

Resources:

https://www.apnews.com/7d8ed38f8c854e7297f2faf5d5c126e8

http://www.ilga.gov/legislation/ilcs/documents/075000050k504.htm

 

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