Tax Implications – Support Payments
The tax rules have recently changed in regard to Spousal Maintenance and Child Support and took effect on January 1, 2019. Understanding these changes and how it may affect your financial situation is important for your long-term financial success.
Illinois also updated how child support and spousal maintenance are calculated. These guidelines set out a more consistent process across the state but may not be the best for you and your situation. While a judge can deviate from the guidelines, it is usually easier if the spouses can agree on a customized solution that meets their unique needs.
Spousal Maintenance
At the highest level, several factors are analyzed to determine if spousal maintenance (also called spousal support or alimony) are appropriate. If the tests are met, there are guidelines for calculating the maintenance amount. The guidelines were updated in 2017 and 2018 and once again in 2019 with the new tax rules.
Child support
Until recently, the custodial parent was given a percentage of the non-custodial parent’s net income, based on the number of children. Today, the concept of custody is gone (from a layman’s perspective) and the amount of child support is based on an allocation of the family’s total income and the relative amount of time the children spend with each parent. The new child support guidelines are also more clear when it comes to dealing with day care and other child-related expenses. The amount of child support today is significantly less than it was before these changes were enacted.
Implications for Your Divorce
The difference in how these payments are handled, along with the recent changes, may actually bring opportunity. Being creative when it comes to support payments may help both parties. By speaking with JK Financial Planning you can understand how these guidelines may affect you and your long-term goals, helping you to achieve the financial success you desire after your divorce is final.
Schedule a 30 Minute Complimentary Getting Acquainted Meeting with Jeff today for more information on how JK Financial Planning can aide you in your divorce.