Over the last few years, Illinois lawmakers have made sweeping changes to domestic relations law. Those changes include a new method for calculating child support, new definitions of parental roles and responsibilities, and new guidelines for divorced parents seeking to relocate with their children. This year, the most significant change to family law in Illinois involves maintenance, formerly known as “alimony” or “spousal support”. In keeping with changes to federal tax law governing maintenance enacted in 2017, Illinois has made maintenance “tax free” by eliminating the previously-mandated deductions and obligations. This new law will have major tax implications for those initiating or finalizing a divorce involving maintenance in or after 2019. If you are divorced, or are going through the process of divorce, it is important to know about these changes in order to understand if they will impact your maintenance payment and how that could affect your finances overall.
What Changed? Why?
The Illinois legislature’s changes to existing Illinois maintenance laws under Section 504 of the Illinois Marriage and Dissolution of Marriage Act (IMDMA) were in direct response to major changes in federal tax laws governing maintenance in 2017. When the federal government enacted the Tax Cuts and Jobs Act (TCJA), maintenance payments became “tax free” by eliminating tax deductions for the person paying maintenance (the “payor”) and removing declaration obligations for the person receiving maintenance (the “payee”). Consequently, the tax burden flipped from the payee to the payer. As of January 1, 2019, the State of Illinois began applying those tax burdens, and breaks, in accordance with the federal law.
When considering the potential impact of this new law, it is important to remember that maintenance is normally only granted when one person in the marriage or civil union earns significantly more than the other. Maintenance is not a given in every divorce, but rather is granted by the judge after consideration of several statutory factors involving the parties’ financial situation during the marriage. In fact, maintenance is usually ordered only when there is a significant disparity between incomes that could leave the receiving party in bad shape financially if they were to lose all monetary support from their former spouse. It is important to note that the updated statute continues to protect the payor by mandating that maintenance payments cannot exceed forty (40) percent of the parties’ combined incomes.
In recognition of the disparity between incomes, and in an effort to generate more tax revenue, the TCJA assigns the tax burden to the higher-earning payor instead of the payee. This decision is in keeping with the idea that because the payor is the higher earner they can afford to pay more in taxes. By eliminating the tax deductions for maintenance previously allocated to the payor, the payor will have a greater tax burden that could move them into a higher tax bracket. Likewise, eliminating the obligation that the payee pays taxes on maintenance received will likely move them into a lower tax bracket. The result is a significant savings for the payee, and a significantly higher tax burden for the payor.
Who is Impacted?
It is critical to note that under the TCJA and new Illinois laws, these changes only impact individuals ordered to make maintenance payments on or after January 1, 2019. Anyone ordered to pay maintenance prior to 2019 will not lose their tax deduction. Likewise, recipients of maintenance under a court order issued prior on or before December 31, 2018 still has to declare maintenance as income and will continue to pay taxes on any maintenance received.
However, for anyone whose divorce is finalized in or after 2019, the new law will govern any tax burdens or benefits related to their maintenance payments. Individuals who filed for divorce prior to 2019 will not have the benefit, or obligation, of the previous tax laws if maintenance payments were not ordered until 2019 or after.
Additional Changes to Know About
In addition to the changes to the tax implications for the parties, it is important to note that the legislature also enacted other changes that impact who can receive maintenance and how it is calculated.
First, the new law included that individuals in a civil union are also entitled to maintenance, meaning that maintenance is no longer restricted just to married couples.
Second, the legislature has enacted significant changes to the formula used to calculate alimony. Previously, alimony was calculated by taking thirty (30) percent of the payor’s gross income and subtracting twenty (20) percent of the payee’s gross income. “Gross” income is defined as an individual’s total income before taxes and other mandated deductions. Now, alimony payments are calculated by thirty-three (33) percent of the payor’s net income and subtracting twenty-five (25%) percent of the Payee’s net income. “Net” income is defined as an individual’s total income after taxes and other mandated withholdings. How this change from gross to net income, and the increase in the percentages, impacts the amount of a maintenance payment will depend on the parties’ individual incomes.
As with child support, net income is calculated using a standardized tax amount rather than an individual’s actual tax amount. Individuals wishing to use their own personal tax amount must either seek an agreement to that effect with the other party or petition the court for the use of an individualized amount instead of the guidelines.
Can I Take My Case Back to Court?
Given the changes in federal and Illinois tax law regarding maintenance payments, and the new formula used to calculate maintenance payments, recipients of alimony may be curious as to whether they can take advantage of the tax breaks available to recipients of maintenance by seeking a modification to their current maintenance agreement.
The new statute explicitly states that an individual cannot seek a modification to a maintenance order granted prior to January 1, 2019 solely on the basis of the new tax laws. Additionally, any maintenance order that is modified during or after 2019 will continue to be taxed according to the year the original order was entered. The only way to apply the new tax laws to an old maintenance order is if the parties agreed that the maintenance payment was modifiable in their original agreement or the parties agree to a modification to apply the current tax laws to their maintenance payments.
Consequently, anyone wishing to relieve their tax burden by eliminating the requirement that they declare their maintenance payments as income is, unfortunately, out of luck. Likewise, those who entitled to the tax deductions authorized under the previous law will continue to reap that benefit.
Will These Changes to Maintenance Impact My Child Support Payment?
If children were born during the marriage, the person paying maintenance is also likely to be making child support payments. It is important to know that the new tax laws regarding maintenance should not impact the amount of child support payments. The new laws were written only to change how maintenance is taxed and calculated. Under the current law, child support is a calculation and obligation almost entirely separate from maintenance.
However, the statute also includes new language that the total amount paid in maintenance and child support cannot exceed fifty (50) percent of the payer’s net income. If that occurs, the judge has discretion to depart from the statutory guidelines in order to reduce the payment amounts to an equitable amount to avoid penalizing the payor.
Chicago Family Law Group, LLC has successfully helped many people on both sides of the issue of maintenance. If you are planning to get divorced and would like to know more about possible maintenance obligations or benefits, we can answer your questions and provide you with the assistance you need.
Call us today at (312) 893-5888 to discuss your case with one of our attorneys and find out how we can help you.
If your child support order was entered prior to 2017, it was calculated under old law. Previously, child support was based solely on the income of the non-residential parent (i.e. the parent who does live with the children most of the time). The child support amount was a certain percent of the non-residential parent’s income: 20 percent for one child, 28 percent for two children, 32 percent for three children, 40 percent for four children, and so on. The judge calculated the non-residential parent’s child support payment based only on their income and the number of children the parents shared.
How Has Illinois Child Support Law Changed?
Last year Illinois implemented new laws that drastically changed the way that the courts calculate child support payments. Judges now look at the incomes of both parents to determine their combined child support obligation. This method is called an income-shared approach, meaning that both parents have a child support obligation to the child. In order to calculate the new child support amount, the judge looks at both parents’ net incomes (net income is gross income minus taxes and certain other deductions). The parents’ net incomes are combined to create a “household income”, as though the parents and children live together. Illinois has created a guideline child support amount that both parents must contribute toward based on that combined household income. Each parent is responsible for a percentage of the child support guideline amount based on the percentage of that parent’s contribution to the household income. So, if the non-residential parent’s income is 60 percent of the household income, then the non-residential parent has to pay 60 percent of the child support guideline amount. Under that scenario, the residential parent is then responsible for 40 percent of the child support amount. However, it is important to note that the non-residential parent does not have to make a payment as they are already considered to be paying child support because the child lives in their home.
What Do These Changes Mean For You?
Child support payment amounts do not change unless one of the parents brings the case back to court and asks for the child support payment amount to be recalculated. Consequently, even though you and your ex may see significant changes in one or both of your incomes, the child support amount will remain the same unless one of you seeks to modify it. Because the guidelines are now based on both parents’ incomes, you may want to consider bringing your case back to court if your income or your ex’s income has significantly changed since the last child support order was entered. These changes to the law may allow you to lower your child support payment, or increase you ex’s child support payment, depending on your current incomes.
If You Want to Lower Your Child Support Payment:
If you are the non-residential parent and have had an involuntary decrease in your income, the current law could help you to reduce your child support payment. We have had many clients come to us with child support orders that were created when they earned a higher income. A reduction in income does not mean an automatic reduction in your child support payment—you have to return to court to request that the payment amount be lowered. A significant involuntary decrease in income will allow you to re-open your case so that a new child support payment can be calculated based on your reduced income. It is important to note that a significant income decrease is usually 10 percent or more and must be involuntary. You cannot quit your job, go back to school, or cut your hours back to part-time in order to ask for a reduction in your child support payment.
Another reason to consider bringing your case back to court is if you believe your ex has experienced a significant increase in income. Previously, the residential parent’s income was not considered when assessing child support payment amounts. Under the current guidelines, if your ex earns more than you they are responsible for a greater portion of the child support guideline amount even if they are the residential parent. If your ex is now earning a larger salary than when you were last in court, or you suspect they may be making more money than you, recalculating the child support amount utilizing their increased income could lower your payment.
If You Want to Increase Your Ex’s Child Support Payment:
Many clients come to us with old child support payment amounts that were calculated when the non-residential parent was in school, working part-time, or just earned a lower salary. Child support payments do not change until one of the parents brings the case back to court based on a “significant change” in circumstances. Usually, a significant change is an increase or decrease in income of 10 percent or more. If you believe that your ex’s income has significantly increased since your child support payment was calculated, you can bring your case back to court to ask that your ex’s child support payment be recalculated based on their current income. An increase in their income could result in a larger child support payment for your child.
What Should You Do Next?
Chicago Family Law Group, LLC has successfully helped many people on both sides of this issue. Whether you are looking to decrease your child support payment or increase your ex’s child support payment, we can help. Under the current law, modifying your child support order does not have to be a long or difficult process. We have been able to help many of our clients modify their child support payments within six to twelve months of filing to re-open their cases.
Call us today at (312) 893-5888 to discuss your case with one of our attorneys and find out how we can help you.
I’m really excited for 2017 to be Chicago Family Law Group’s Best Year Ever. Personally I’ve been working through Michael Hyatt’s rigorous goal-setting curriculum & some HUGE upgrades are being rolled out at CFLG literally this month of February. More details to come but to ‘tease it’ out a bit…adding multiple new legal staff AND total Website re-vamp set to hit by 2/15/17. So EXCITED to protect more families/marriages and IMPROVE OUR WORLD!
The Illinois Family Law Scene
Here’s what is strange to me about the Illinois political environment, on one hand there’s the perception/reality that our General Assembly is not accomplishing much and the state is in awful financial condition, HOWEVER, there have never been such significant changes in the family law space over my 15-years of lawyering as there have been over the last 2+ years.
6 RECENT PAST/FUTURE Law Changes Having MAJOR Impacts
- Income-Shares Child Support model. Effective 7/1/17 (and with major details still needing to be rolled out by lawmakers), we move from the % guidelines model that basically looked purely at the payor’s income to a model that considers BOTH parents’ incomes. The word on the street is that a payor’s support obligation is often lower under this model, however, the key issue likely will vary based on the payee’s income which is now a key component to a child support calculation. If you’ve been thinking about a child support reduction, shortly after 7/1/17 might be a good time to pull the trigger.
- Temporary Matters More Efficient. Parentage and divorce cases often take 6-months to 2-years to resolve-in-full and therefore we’re frequently filing for temporary (while the case is pending) maintenance/child support/attorney’s fees to protect clients over that 6-month/2-year period. Historically these ‘temporary matters’ included significant litigation. However, the new law that became effective 1/1/16 makes these matters easier/abbreviated based solely on the parties’ financial affidavits plus supporting documents (tax returns, paystubs).
- Spousal Support is FAR MORE Prevalent. The spousal support (maintenance) guidelines became effective 1/1/15 and maintenance is far easier to get for our clients now. Previously, maintenance amounts/duration were set wholly on a series of 10-12 factors that made maintenance VERY UNPREDICTABLE. Now assuming an income disparity between divorcing spouses judges are pretty much simply applying the guidelines (30% gross income – 20% gross income = maintenance amount). My observation is that the duration formula is a tad unfair with longer awards that aren’t appropriate.
- Student Loan deductions for child support. This wasn’t clear previously but as of 1/1/16 when we have young-ish parents if there are student loans BEING PAID that’s a deduction against ‘net income’ for purposes of the child support calculation…not a question any longer.
- Relocation Mileage Limits. So to review the big change here as of 1/1/16 became a majority-time parent’s ability to relocate with a child changed from being tied to moving to a different state to NOW having a 25/50 mile limit (depending on where you live in Illinois). In our experience over the last 12-13 months the new mileage limits have increased litigation. I thought this when the law was passed and it’s true….25/50 miles are too small of mileage limits.
- Cook County Domestic Relations Division Reorganization. Effective 2/6/17, a lot of shuffling is happening in the courtrooms that we frequent on a daily basis and hopefully I won’t get lost at the Daley Center with a ton of judge/courtroom changes…but that’s all just administrative and I’ll adjust. The BIG CHANGE that I believe will help our clients is that the 2 ‘parts’ of family law (divorce and parentage) will no longer will segregated. For my first 15-years of family lawyering, parentage cases (unmarried parents) were the ‘2nd class’ part of the universe with fewer courtrooms and judges. Now, all 43 (approximate current number of Cook County domestic relations judges) judges will be handing ‘combined’ dockets with divorce/post-divorce/parentage matters. I think this will upgrade the way in which parentage matters are handled.
Lets make 2017 YOUR Best Year Ever.
We can help with that HERE or @ 312-893-5888.
You are a parent raising young kids in the state of Illinois but you think another state or county within Illinois would benefit your family more. Problem: you share parental allocation or responsibility (formerly custody) with your ex-spouse. In the State of Illinois, just because the child(ren) reside with you, does not mean you get to dictate where they live, especially if it means relocating out of the State of Illinois.
Under the new family law statute of January 1, 2016, ((750 ILCS 5/) Illinois Marriage and Dissolution of Marriage Act ) for parental relocation, if a parent whom the child(ren) resides with majority of the time wishes to relocate, whether it is somewhere else in the state of Illinois or another state altogether, they must give the other parent 60 days written notice (unless impracticable then it must be given at the most earliest date possible) of where they plan to move. Notice is required if you fall under three categories:
- Moving more than 25 miles from the child’s current home, if the child lives in Cook, DuPage, Kane, Lake, McHenry, or Will County;
- Moving more than 50 miles from the child’s current home, if the child lives in any other county in Illinois;
- Moving out of state to a new residence that is located more than 25 miles from the child’s current home.
In this notice, the parent must include the follow:
1) Exact date that they plan to move
2) The new address
3) The length of time if the move isn’t permanent
If the other parent is agreeable with the move, then your job is just about done. You simply draft an agreement and have the other parent sign off on it and then you file the agreement with the court. If the other parent is opposed to the move, you must get permission from the courts to relocate by filing a petition. The court will usually considers the reason for the move – such as better opportunity for the child(ren) and the effect on parenting time for the other parent.
Most times, parents aren’t as far apart in their wishes. Be ready to compromise and offer reasonable parenting plan for the other parent’s parenting time to not be too affected. The courts would much rather you work out an agreement than to make a decision that may not work for either you or the other parent. The factors the court will consider are outlined below directly from an excerpt of the statute:
(750 ILCS 5/609.2)
Sec. 609.2. Parent’s relocation.
(g) The court shall modify the parenting plan or allocation judgment in accordance with the child’s best interests. The court shall consider the following factors:
(1) the circumstances and reasons for the intended relocation;
(2) the reasons, if any, why a parent is objecting to the intended relocation;
(3) the history and quality of each parent’s relationship with the child and specifically whether a parent has substantially failed or refused to exercise the parental responsibilities allocated to him or her under the parenting plan or allocation judgment;
(4) the educational opportunities for the child at the existing location and at the proposed new location;
(5) the presence or absence of extended family at the existing location and at the proposed new location;
(6) the anticipated impact of the relocation on the child;
(7) whether the court will be able to fashion a reasonable allocation of parental responsibilities between all parents if the relocation occurs;
(8) the wishes of the child, taking into account the child’s maturity and ability to express reasoned and independent preferences as to relocation;
(9) possible arrangements for the exercise of parental responsibilities appropriate to the parents’ resources and circumstances and the developmental level of the child;
(10) minimization of the impairment to a parent-child relationship caused by a parent’s relocation; and
(11) any other relevant factors bearing on the child’s best interests. (h) If a parent moves with the child 25 miles or less from the child’s current primary residence to a new primary residence outside Illinois, Illinois continues to be the home state of the child under subsection (c) of Section 202 of the Uniform Child-Custody Jurisdiction and Enforcement Act. Any subsequent move from the new primary residence outside Illinois greater than 25 miles from the child’s original primary residence in Illinois must be in compliance with the provisions of this Section. http://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2086&ChapterID=59&SeqStart=8300000&SeqEnd=10000000
So quick recap:
- DO give the other parent notice
- DON’T give notice after moving
- DO put notice in writing with required details
- DON’T withhold your new address
- DO encourage parenting time between the other parent & minor(s)
- DON’T move in bad faith or place minor(s) in a worse off position than they will be in if they stay where they currently reside.
If you are planning on relocating and the other parent is not willing to sign off on the move and you are located in Cook, Lake, Will, Kane, and Du Page counties, call our offices and schedule an appointment at 312-893-5888.
Peter was honored to appear recently on Mauck & Baker’s Lawyer for Jesus radio program. Checkout the full broadcast HERE.