Alimony Tax Deduction Going Away: What it Means for Illinois Divorce

Few people will say they look forward to divorce, but a recent change to US tax laws may make you consider getting started on the process right away in Illinois. As the Chicago Tribune explained in a recent article, the Tax Cuts and Job Act will affect all divorces starting in January of 2019. The details regarding spousal support and tax treatment will vary depending on your circumstances, especially since Illinois has already adjusted its alimony laws to account for the changes to federal law. You should consult with a skilled Illinois divorce attorney about your situation right away, but an overview of the changes will follow below.

No Change to Divorces Finalized Before December 31, 2018

The intent behind spousal support will not be affected by the new tax law. The Illinois Marriage and Dissolution of Marriage Act still allows a spouse to request alimony, and a court will order it when appropriate. A change to Illinois law that went into effect in July of 2018 remains intact: A judge will consider the alimony amount and duration when the combined income of the parties is under $500,000. If the parties make more than that amount, a court can deviate from the statutory guidelines.

At the federal level, there is also no change for divorces finalized or modified before December 31, 2018. A payor spouse will be able to take a tax deduction for all amounts paid under an alimony agreement between the parties or an order issued by the court. The person paying support can subtract those amounts from taxable income, reducing income tax liability.

Divorces and Modifications in January 2019

With the new tax law taking effect next year, alimony payments will no longer be tax deductible as they have been for 75 years. The federal law applies to all spousal support agreements or orders that become final starting January 1, 2019. What this means for parties to an Illinois divorce is that you can still take advantage of the tax deduction through the end of 2018. You can reap the benefits if you are able to negotiate a fair and reasonable spousal support agreement, and have the proper documents filed in court before that date.

Illinois Updates to Spousal Support

Once the Tax Cuts and Job Act was passed, Illinois lawmakers acted quickly to adjust alimony laws. Senate Bill 2289 will become effective on the same date as the new federal law: January 1, 2019. Generally, the statutory guidelines regarding parties’ income will be adjusted to result in lower spousal maintenance payments. The specifics depend on your unique circumstances.

Discuss Taxes and Alimony with an Illinois Divorce Attorney

Time is of the essence if you are going through an Illinois divorce, but you can expedite the process with the help of a knowledgeable divorce lawyer. For more information, please call Glasgow & Olsson at 847-577-8700 or visit us online. We are happy to schedule a consultation to explain divorce options and the advantages of working out a spousal support agreement right away. We assist couples throughout DuPage, McHenry, Cook, and Lake Counties, and we can help you, too.

(image courtesy of Lucas Favre)

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