Legislature Adjusts Maintenance Calculation for Divorce Starting in 2019
In August, 2018, the Illinois Legislature announced several amendments to the Illinois Marriage and Dissolution of Marriage Act, including one that changes the calculation judges use when issuing decisions of maintenance, commonly known as alimony.
Maintenance is a monthly allotment of cash paid from one party, the payor, to another, the payee. A family court judge places an order of maintenance in a divorce judgement when one party has a greater income and the judge decides that the party with the lesser income needs assistance to maintain their needs.
Introduced by State Senator Michael Hastings (D-19th District-Tinley Park) and State Representative Kelly Burke (D-36th District-Oak Lawn), the maintenance amendment adjusts the percentages by which the payors’ and payees’ incomes are multiplied to figure how much alimony/maintenance will be paid on an annual basis. The amendment also includes another major change. It instructs family law judges to use each party’s net annual income—actual take-home pay after taxes—instead of their gross income.
Here’s how the legal language reads:
Maintenance Calculations Previously:
“…the amount of maintenance … shall be calculated by taking 30% of the payor’s gross annual income minus 20% of the payee’s gross annual income…”
New Maintenance Calculations:
“…the amount of maintenance … shall be calculated by taking 33 1/3% of the payor’s net annual income minus 25% of the payee’s net annual income…”
The new provision allows for maintenance decisions to be based on more realistic take-home pay figures, rather than gross income amounts. If either party has a particular tax burden or tax benefit, that will be accounted for in their net income total. It is yet to be seen how net income will or can be manipulated during the divorce process.
The necessity behind the modification for divorces and separation agreements entered on or after January 1, 2019 is the modification to the Federal tax codes. After January 1, 2019, maintenance will no longer be deductible for the spouse who pays maintenance for those divorced or separated after January 1, 2019. As a result, the recipient no longer includes maintenance as taxable income.
For divorces entered on or before December 31, 2018, alimony (maintenance) has been deductible to the maintenance payor and the spouse receiving maintenance includes it as income for tax purposes. What this means is that generally the alimony payor has received a tax break on alimony as paid.
While the guidelines for maintenance for Judgments after January 1, 2019 are now modified and based on net income, the Court must still first consider the following factors before it applies the guidelines consistent with Section 5/504 of the Illinois Marriage and Dissolution of Marriage Act:
(1) the income and property of each party, including marital property apportioned and non-marital property assigned to the party seeking maintenance as well as all financial obligations imposed on the parties as a result of the dissolution of marriage;
(2) the needs of each party;
(3) the realistic present and future earning capacity of each party;
(4) any impairment of the present and future earning capacity of the party seeking maintenance due to that party devoting time to domestic duties or having forgone or delayed education, training, employment, or career opportunities due to the marriage;
(5) any impairment of the realistic present or future earning capacity of the party against whom maintenance is sought;
(6) the time necessary to enable the party seeking maintenance to acquire appropriate education, training, and employment, and whether that party is able to support himself or herself through appropriate employment or any parental responsibility arrangements and its effect on the party seeking employment;
(7) the standard of living established during the marriage;
(8) the duration of the marriage;
(9) the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, and the needs of each of the parties;
(10) all sources of public and private income including, without limitation, disability and retirement income;
(11) the tax consequences of the property division upon the respective economic circumstances of the parties;
(12) contributions and services by the party seeking maintenance to the education, training, career or career potential, or license of the other spouse;
(13) any valid agreement of the parties; and
(14) any other factor that the court expressly finds to be just and equitable.
If the court finds that these factors merit an award of maintenance, then the guidelines must be utilized unless the Court deviates from the guidelines for reasons the Court states on the record.
Navigating this issue is complex and must be considered as part of the process. For assistance in understanding maintenance in marriage dissolution cases, contact the Family Law Attorneys at Sterk Family Law to get started. Please contact our office at 815-600-8950 or contact us online to schedule a free consultation.
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