In this article, we will be providing a brief overview of Illinois Spousal Maintenance Laws as well as discussing any 2021 updates to Spousal Maintenance Laws in Illinois, which includes addressing the topics of:
- What is Spousal Maintenance, formerly Alimony?
- How is Spousal Maintenance Calculated?
- Gross Income v. Net Income
- Calculating Income for Non-W2 Employees
- Allowable Deductions from Gross Incomes
- How is the Length Spousal Maintenance Calculated?
- Is There Spousal Maintenance in Every Case?
- Who Pays Taxes on Spousal Maintenance?
- 2021 Updates to Illinois Spousal Maintenance Laws
This article is intended to overview the updated Illinois Spousal Maintenance laws and their applications. For a more in-depth look at some of these areas of law, please follow the links contained throughout this article.
What is Spousal Maintenance, formerly Alimony?
Spousal maintenance is a support payment made from the higher-earning spouse to the lower-earning spouse, intended to keep each spouse in the lifestyle enjoyed during the marriage. For more information on spousal maintenance, please see our article: Illinois Spousal Maintenance Explained.
How is Spousal Maintenance Calculated?
In cases where the joint income of the parties is less than $500,000, the guideline maintenance calculation calls for taking 33.33% of the higher earns income and subtracting 25% of the lower earner’s income. The remainder of that amount is the statutory guideline maintenance payment. The amount paid from the higher earner to the lower earner cannot bring the lower earner’s total income beyond 40% of the total income of the marriage. Please see our other article for a more detailed explanation of Calculating Spousal Maintenance in Illinois.
Gross Income v. Net Income
Gross income is the total amount of income from all sources before appropriate deductions. Net income is the total amount of income from all sources after appropriate deductions. In Illinois, when calculating spousal support, the parties' net income is used.
Calculating Income for Non-W2 Employees
In many cases, one or both of the parties are not traditional W-2 income earners. In cases where one spouse works as a 1099 employee, receives bonuses, or works on commissions, it is essential to determine the total amount of income received from all sources. It is also important to remember that the bonuses, commissions, and 1099 income is subject to having taxes and other deductions removed from the gross funds received. Additionally, if the commissions and bonuses fluctuate considerably, you may need to calculate income using annual averages and allow for frequent modifications. To learn more about calculating net income, please see our detailed article on How Net Income is Calculated for Spousal Maintenance.
Allowable Deductions from Gross Incomes
There are multiple deductions allowed from the Gross Income of each party. State and Federal taxes are appropriate deductions. Mandatory retirement contributions are deductible from gross incomes. Costs related to owning and operating a business may also be deductible. If you need additional information for determining income for the purpose of calculating spousal maintenance, please see our article: How to Calculate Illinois Spousal Maintenance?
How is the Length of Spousal Maintenance Calculated?
Spousal maintenance is calculated based on the length of the marriage. The formula for calculating spousal maintenance duration is the length of the marriage multiplied by the relevant factor. The length factor is .2 for any marriage less than five years. For each year of marriage beyond five years, the length factor is increased by .04 until year 20. At year 20, the factor increases to 1.0 and may be ordered for an indefinite time period if the need is established. For more information about the length of a spousal maintenance obligation, please review our other article on Illinois Spousal Maintenance 2020.
Is There Spousal Maintenance in Every Case?
No. If the parties have similar incomes, with the lesser earning spouse earning at least 40% of the marital income, spousal maintenance is not appropriate. Additionally, spousal maintenance is a needs-based determination, so if the marital estate allows for each party to leave the marriage with significant resources to establish themselves in the next phase of life, maintenance may not be appropriate.
Who Pays Taxes on Spousal Maintenance?
In 2019 there was a significant modification to the federal tax laws. This modification moved the tax burden on maintenance income from the payee to the payor. Currently, the payor pays income on their gross income and then pays the payee the appropriate maintenance amount. The payee does not pay taxes on the funds received as a maintenance payment.
2021 Updates to Illinois Spousal Maintenance Laws
So far in 2021, there have not been any modifications to Illinois Maintenance laws. With a new administration being installed at a federal level, there may be modifications to the taxable treatments of maintenance, but there are currently no plans to adjust the maintenance laws for 2021.
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