MLG LAW GROUP-CHICAGO DIVORCE AND CUSTODY LAWYERS

The child support component of payments is not a taxable event. If someone receives a certain amount of money in child support, they do not declare that as income nor does the party who paid the child support claim it as a deduction for either federal or state tax purposes in Illinois. Maintenance, however – spousal support is what we used to call alimony – is a taxable event. There are some little wrinkles that the IRS has set up over the years to try to make sure that if money is changing hands and being called alimony, that it really is alimony. Assuming that those fairly simple tasks are met, the person who pays it takes that amount of money as a deduction right off the bottom of the front page of their federal tax returns. It comes right off the gross income. The party who receives it, it gets treated as ordinary income, so they pay tax on it. In general, maintenance is a taxable event, child support is not.

One spouse will say, “You know, I think that the other spouse has been taking money out of the business and not reporting it.” That can be a very challenging situation. The lawyer’s first question is going to be, have you filed joint federal income tax returns? At the time that you file those joint returns, did you suspect or were you aware that your spouse was not declaring all of their income? When faced with that kind of situation, that’s a fairly sophisticated manner. It’s going to require some advice from a tax professional. Presumably, your divorce lawyer is going to be able to put you in contact with a CPA who has been through that issue, who knows how to address that with the IRS, who knows how to resolve it in a way that avoids hopefully any kind of adverse consequences to the innocent spouse.

In Illinois now, we have a provision where typically these spousal support payments do terminate when the paying spouse dies, but it can be secured now and by court order. It can be secured with a life insurance policy. That’s really an important provision because, historically, if some tragedy were to occur to the party who’s paying, it would leave the recipient totally unprotected. We’re seeing much more frequently now with this new provision that maintenance awards are protected with a life insurance requirement. Absent that statute, there wasn’t historically an insurable interest in the party who’s paying and it was difficult to obtain life insurance to secure the obligation. But this new provision has really helped us in terms of protecting the recipient. On the disability side, that’s a little bit trickier. If it can be negotiated so there’s some kind of disability coverage and that can be incorporated into a divorce decree, that can many times make sense for the party who’s o

This time of year leads to more people deciding to divorce than any other.  The holidays make people miserable and New Years resolutions make it easy to decide to put the terrible part of your life behind you.  Many people won’t file until the spring when they get their tax returns, but there are thousand who decided in the last week that they want out of their marriage.  With that in mind, I asked some of the best divorce lawyers in Chicago and the burbs what “real” advice they’d give to a prospective client and some from me too.   In no particular order: 1.      As much as getting a divorce is hard to pull the trigger on, you aren’t re-inventing the wheel here.  You’ve probably heard that ½ the marriages in the US end in divorce.  In recent months we’ve seen it happen to Kobe Bryant, Tiger Woods, Kim Kardashian, Demi Moore and John (Cougar) Mellencamp.  Of course there are tens of thousands of every day normal people in this boat too.  Point is that you aren’t alone and while it t

op Ten Ways to Survive the Holidays During and After Divorce Coping with separation, divorce and loss is MAGNIFIED as the holiday season approaches. Many people feel overwhelmed by the stress and strain of trying to maintain the status quo, when in fact, their entire world is collapsing around them. The Holiday season serves as a constant reminder of festive, happier times and is contrasted by the stark reality of loneliness and despair. While others are eagerly anticipating the holidays, a newly separated or divorced person often approaches this time of year with panic, sadness, and dread. Although there are no magical solutions to cure the holiday blues, there are things you can do to make it easier to cope. 1. PLAN AHEAD - Plan to do something that is fun, relaxing, and as stress free as possible with people you really care about. If the holidays are just too painful and the reminders are everywhere, consider a vacation that allows you to "escape " the painful triggers.