The West Suburban Divorce Support Group Message Board › Maintenance vs Family Support

Maintenance vs Family Support

Stevie B
user 8325466
Group Organizer
Oswego, IL
Post #: 5
This is an email I received from a member and was wondering if anyone in the group would like to comment....

My attorney wants me to figure out the tax implications of whether to claim as maintenance payments or to roll maintenance into "family support".

Do you know of any tax programs or web sites that would figure out the different scenarios? I have been searching on the web and they all give examples but do not have the actual program that you can input salaries, payments, morgage, etc.

Just thought maybe someone in the group would be knowledgable or would know how or where to perform this analysis?

Marcie
user 17912011
Bartlett, IL
Post #: 1
Alimony is taxable income while child support is non-taxable. Not being an accountant, the question is are you paying maintenace or receiving it. I would think if you are paying it then it would be better to be able to deduct it on your taxes and the person receiving it has to count it as taxable income.

Child support is non taxable to either party.

If I was receiving it, I would want it as child support if possible to avoid having to add it as taxable income.

Are there any other advantages or disadvantages from a legal point of view as to which is recommended in case agreement arrangements are challenged in court later on? I am thinking from the view point that if your ex spouse decides to go back to court later would the court be more willing to adjust family support vs. maintenace support.

If this does not help, let me know cause I can ask a relative who is an accountant.



Here is something I found on the web:



Tax Consequences of Spousal Maintenance

In deciding whether to “buy-out” the other party’s spousal maintenance, it is important to consider the tax consequences.

Property or proceeds exchanged as part of a property settlement is not taxable event. The proceeds paid are not deductible to the payor or taxable to the recipient. By contrast, the payment of spousal maintenance is a taxable event. Spousal maintenance is tax deductible by the person paying. It is not included as income for the obligor giving that party a dollar for dollar offset against his/her earnings. By contrast, spousal maintenance that is paid is included as taxable income by the person that receives it.

It is also important to note that attorney’s fees incurred by a party seeking spousal maintenance may be tax deductible as an expense incurred for the production of income. You may wish to speak with your attorney regarding that issue.
Crystal
user 8697468
Lyons, IL
Post #: 65
To my knowledge, I do not know of any tax programs that would do so. What you would have to do, is buy the program and plug in the numbers for the various cases. Or ask a tax accountant what they would charge you to do so. If you ask them NOW before tax season, they should have time to do it.

I do not have enough information as to if you will be paying or receiving the support and the ages of the children, if any, involved.

The IRS does have a publication 504 for persons dealing with divorce which states what is deductible and what is not. http://www.irs.gov/pu...­

Remember Congress writes the tax code and those persons can change the tax code at any time which may or may not impact your decision.

A former member
Post #: 2
I met with a consultant that used a software package called "Family Law."
I wanted to get a second opinion about the level of maintenance that I was being railroaded into paying by my ever-so-helpful attorney. I was advised that the amount "seemed" excessive.

I think "Family Law" would be most helpful in a collaborative divorce situation. But it does calculate for all kinds of divorce finance scenarios. Downside is that the software is not cheap, or easy to use. I used the "free" client version, to basically do data entry, and then forwarded the numbers to the consultant.

The consultant was Gail Petrich. I am kind of neutral on the value of her services. I already knew that the requested maintenance was high. I wanted a little more direction about what a more reasonable amount would be.
Crystal
user 8697468
Lyons, IL
Post #: 69
Spousal Support: Not all cases involve support from one spouse to the other. The obligation of one spouse to support the other financially for a temporary or permanent basis is decided on a case-by-case basis as agreed to by the parties or at the court's discretion.

In a proceeding for dissolution of marriage a maintenance award for either spouse in amounts and for periods of time as the court deems just, without regard to marital misconduct, in gross or for fixed or indefinite periods of time, and the maintenance may be paid from the income or property of the other spouse after consideration of all relevant factors, including: (1) the income and property of each party, including marital property apportioned and non-marital property assigned to the party seeking maintenance; (2) the needs of each party; (3) the 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) 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 is the custodian of a child making it appropriate that the custodian not seek employment; (6) the standard of living established during the marriage; (7) the duration of the marriage; (8) the age and the physical and emotional condition of both parties; (9) the tax consequences of the property division upon the respective economic circumstances of the parties; (10) contributions and services by the party seeking maintenance to the education, training, career or career potential, or license of the other spouse; (11) any valid agreement of the parties; and (12) any other factor that the court expressly finds. (750 Illinois Compiled Statutes - Chapter 5 - Sections: 504)
http://www.divorcesou...­
A former member
Post #: 1

Did you try a Certified divorce financial analyst for any type of aid in your settlement?

Who do CDFA™’s help?
CDFA™’s help clients determine the short term and long term financial impact of any proposed divorce settlement. They also provide valuable information on financial issues that are related to the divorce, such as tax consequences, dividing pension plans, continued health care coverage, stock option elections and much more.
CDFA™’s also help attorneys by helping the client make financial sense of proposals. CDFA™’s give attorneys the tools they need to help prove their case.

http://divorceillinoi...­
Crystal
user 8697468
Lyons, IL
Post #: 137
IL Law for child support is:the term "child" shall include any child under age 18 and any child under age 19 who is still attending high school.

IMDMA §505 - Child Support:

By Federal mandate, each state must review and amend its guidelines every four years. Illinois has been deficient in so doing. The first time that Illinois did so was in 2003 with Public Act 93-0148 in which Illinois increased the support level for two children to 28% of net. There are only six states (including Illinois) which follow a model in which the support guidelines are based upon a percentage of income. As of 2007, 39 states follow what is called the "income shares" model.

1.General Support Provisions: Some of the significant portions of §505(a) read as follows (enforcement procedures and certain other portions are generally omitted; emphases are added):

(a)In a proceeding for dissolution of marriage, legal separation, declaration of invalidity of marriage, a proceeding for child support following dissolution of the marriage by a court which lacked personal jurisdiction over the absent spouse, a proceeding for modification of a previous order for child support under Section 510 of this Act, or any proceeding authorized under Section 501 or 601 of this Act, the court may order either or both parents owing a duty of support to a child of the marriage to pay an amount reasonable and necessary for his support, without regard to marital misconduct. The duty of support owed to a minor child includes the obligation to provide for the reasonable and necessary physical, mental and emotional health needs of the child. For purposes of this Section, the term "child" shall include any child under age 18 and any child under age 19 who is still attending high school.

(1)The Court shall determine the minimum amount of support by using the following guidelines:

Number of children
Percent of Supporting Party's Net Income
1 20%
2 28%*(changed in 2003)
3 32%
4 40%
5 45%
6 or more 50%
http://www.gitlinlawf...­

looks like if 2 children were being supported you need to have court documents lowering the support. whem one reaches majority age.

5) When does child support terminate?

Unless the parties otherwise agree, emancipation of a child terminates the child support obligation, but the termination is not automatic, and the duty to support continues unless and until an order is entered by the court.
http://www.nyelawyer....­
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