Effective January 1, 2019, the taxability of maintenance payments (spousal support) from one spouse to the other has changed. The Tax Cuts and Jobs Act, which was signed into law in December 2017, reversed the 77-year-old tax law that had allowed the higher-earning spouse to deduct his/her maintenance payments and required the lower-income spouse receiving the payments to pay the tax.
New changes to our federal tax laws that just passed Congress have profound implications for divorcing couples. If you are considering a divorce, you should definitely educate yourself on the new law to determine how it might influence your decision.
In Illinois, spousal support is known as “spousal maintenance.” It is the financial assistance that one spouse provides the other after a divorce. Depending on the financial situation of each spouse and the length of the separation process, maintenance may even begin during the divorce. How long it continues after the divorce and how much one spouse will have to pay the other depends on a number of factors.
Spouses are typically allowed to negotiate the value of spousal support. However, a judge will step in and make decisions for the spouses if the issue becomes contentious. Before January of 2015, judges in Illinois had room for a lot of discretion when determining how much support should be given, but that has changed.
Another high-profile divorce is causing a stir, according to an article in The Huffington Post. Actress Mena Suvari, who is best known for her roles in American Beauty and the American Pie films, has had an expensive request from her second ex-husband, Simone Sestito, a concert promoter; he is requesting a whopping $17,000 a month in spousal support, or maintenance, after only 18 months of marriage.
In his request for such a high spousal support figure, Sestito claims that Suvari earns $750,000 a year and that during their marriage he became accustomed to a higher standard of living, including eating out just about every day at high-end restaurants. He listed his approximate dining expenses at $3,000 per month. Suvari, who filed for divorce in January 2012 under “irreconcilable differences,” has asked the court to deny her ex spousal support.
Thousands of parents are jailed each year in the U.S. for failing to pay child support, according to MSNBC.com. Many of these parents have willfully withheld or hid money out of spite or a feeling of injustice. Some, however, have not made the required payments due to financial instability or poverty. Across the country, all non-custodial parents who fail to make their agreed upon child support payments will be subject to the punishments set forth by the laws in their state.
Under the Illinois Non-Support Punishment Act, a person is guilty of a failure to support offense if she or he “willfully, without any lawful excuse, refuses to provide for the support or maintenance of his or her spouse, [knowing] that the spouse is in need of [it] … or, without lawful excuse, deserts or willfully refuses to provide for the support or maintenance of his or her child or children in need of [it] and the person has the ability to provide the support.”
In Massachusetts, legislation has recently been proposed that would significantly change the way alimony payments are decided in the State, reports The Boston Business Journal. Additionally, if passed, it would also allow divorced parties to revisit their established alimony agreements, in certain circumstances.
Known as the Alimony Reform Act of 2011, the bill has been praised by many for giving long-anticipated guidelines regarding alimony awards in the State. Massachusetts does not currently permit judges to set a cap on its duration, which has resulted in many scenarios of working ex-spouses making lifetime alimony payments to a non-working ex-spouse who are supported by an unmarried, live-in partner. Now, the proposed legislation gives precise definitions of new, additional categories of alimony, and also describes how long payments should continue. For example, in “general term alimony,” a former spouse who is economically dependent on the other former spouse is given regular payments; in “rehabilitative alimony,” payment is made to a former spouse who is expected to eventually become financially independent.
Bloomberg recently featured an article that discussed the impact of the National Football League (NFL) lockout on, not only the players, but on the women and children who receive support through players’ alimony payments. If the NFL and its players are unable to come to an agreement on a new labor contract, players may be left without work and a paycheck. On average, a player in the NFL earns approximately $1.8 million per year and as many as 80 percent of professional athletes are affected by alimony and child support payments.
According to the article, many players are taking steps to reduce their child support and alimony payments to reflect their potentially lowered income if the league shuts down. An attorney representing several players says the only option available to players is to file for modification requests since many will not be able to meet their obligations. Under the terms of the current labor contract, NFL players will not receive their first paycheck for the 2011 season until September.. The attorney notes that these requests will need to be made ahead of time to guarantee that any income change corresponds with the income cutoff, should it occur.
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