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Highlights of The New Tax Law’s Impact on Divorcing Couples

If you have been reading about the new tax laws that are going into effect in 2018, you are not alone. How will these new tax laws affect you and your family in the event of a divorce or separation?

There is no simple answer, and the new law could impact one family differently from another. We would like to take some time to explain as much as we can. If you have further questions, do not hesitate to give us a call or contact our experienced Chicago family law firm online.

Spousal Maintenance (Alimony) Changes

For divorcing or divorced Chicago couples, impacts on spousal maintenance (alimony) are at the forefront when tax season arrives. Here is how the updated law impacts divorces enacted after the law has gone into effect:

  1. Spousal maintenance payments are no longer deductible for divorce agreements executed or modified after December 31, 2018.
  2. The receipt of spousal maintenance is no longer includible in gross income for divorce agreements executed or modified after December 31, 2018.
  3. In other words, effective January 1, 2019, spousal maintenance payment are no longer deductible by the paying spouse or taxable to the receiving spouse, BUT ONLY FOR COUPLES DIVORCING AFTER JANUARY 1, 2019.

For Divorce Agreements Executed or Modified on or Before December 31, 2018:

Chicago and Oak Park readers who were divorced before 2019 should know:

  1. Maintenance and unallocated support payments will still be deductible.
  2. The receipt of maintenance and unallocated support will still be includible in gross income.
  3. Maintenance is not deductible if the parties continue to live in the same residence.

Individual Tax Rate Change

  1. Individual income tax rates have been lowered to 10%, 12%, 22%, 24%, 32%, 35%, and 37%

Exemption, Itemized and Standard Deductions Changes After December 31, 2017

  1. After December 31, 2017, a payee spouse can no longer deduct as a miscellaneous itemized deduction legal fees incurred which are attributable to legal services rendered in securing spousal maintenance.
  2. Only $10,000 ($5,000 for married filing separately) of non-business state and local tax deductions (SALT) may be deducted, including state and local real property taxes, personal property taxes and state and local taxes.
  3. You can only deduct mortgage interest related to new loans up to $750,000 for a first and second home.
  4. You will not be able to deduct home equity interest, even if it is currently existing.
  5. Taxpayers with existing mortgages can continue to deduct interest on a total of $1 million of debt for a first and second home.
  6. The adjusted gross income floor is reduced from 10% to 7.5% for the medical expenses itemized deductions in 2017 and 2018 tax years.
  7. You can no longer deduct moving expense as of December 31, 2017, unless you are an active duty member of the Armed Forces.

    STANDARD DEDUCTIONS

    Tax Filing Status20172018
    Single$6,500$12,000
    Married Filing Separately$6,500$12,000
    Head of Household$9,350$18,000
    Married Filing Jointly$13,000$24,000
  8. Beginning 2018, the standard deduction will be $24,000 for married couples filing joint returns.
  9. Beginning 2018, the standard deduction will be $18,000 for filing as head-of-household.
  10. Beginning 2018, the standard deduction will be $12,000 for all other filers.
  11. Beginning 2018, there are no longer any personal or dependency exemptions.

Individual Tax Deduction and Credits

  1. The new tax law keeps the “additional standard deduction” for people age 65 and over of $1,600 for singles and $1,300 for each married spouse in 2018.
  2. A non-custodial parent cannot qualify for the Earned Income Credit.
  3. A non-custodial parent cannot qualify for the Child Care Credit.
  4. A non-custodial parent cannot file as Head of Household.

Ambiguities In Individual Tax Deductions and Credits

  1. The parent with the most parenting time overnights used to be presumed to have the right to the dependency exemption absent an agreement to the contrary.
  2. It is yet to be determined whether the parent with the most parenting time overnights will be presumed to have the right to the child tax credit.
  3. It is yet to be determined if a court order gives each parent half of the parenting time, whether the IRS will continue not to consider 50/50 custody, and the parent with the most overnights will receive the Earned Income Credit, the Child Tax Credit, and the right to file as Head of Household.

Ambiguities like these are why it is essential to have a qualified family law attorney handling your divorce and a tax professional handling your taxes.

Contact Our Chicago Divorce Lawyers with Questions

The above highlights are not intended to be a comprehensive summary of all the new tax laws. Also, the Oak Park family law attorneys at Conniff Law Offices are not tax lawyers. However, for more information on the impact the new tax laws may have on your divorce, please contact our skilled attorneys at 708-763-0999.

In accord with U.S. Treasury Department regulations we must inform you, unless expressly stated otherwise, that any advice contained in this communication is not intended nor shall be used for the purpose of avoiding tax-related penalties under the Internal Revenue Code or for the promotion, marketing or recommendation to another party of any federal tax transactions or matters set forth herein.

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Prenuptial Agreements vs. Postnuptial Agreements

The most obvious difference between prenuptial vs. postnuptial agreements is when they take place. A prenuptial agreement (also called a prenup) must be made before a couple gets married, while a postnuptial agreement can be drawn up after a couple is already married. This may be the most immediately apparent difference, but it’s certainly not the only one of importance. When deciding whether to get a prenuptial agreement or postnuptial agreement, you should know what can and cannot be included in them. Get the details you need to know with the Chicago and Oak Park family law attorneys from Conniff Law Offices, below.

What is a Prenuptial Agreement?

A prenuptial agreement is an agreement made before a couple gets married that outlines how their assets are to be divided if they were to get divorced or if one spouse were to pass away. Some argue that a prenup is unromantic and can even doom a marriage before it begins, while others believe it to be reasonable and responsible, especially for re-marrying couples who have a lot of individual assets or who have children from previous marriages.

What Can Be Included in a Prenup?

  • – Distinctions between separate and marital property
  • – Protections against the other spouse’s debts
  • – Terms designed to provide for children from previous marriages
  • – Protections designed to keep family property in the family
  • – Protections for estate plans
  • – Instructions on how property should be distributed in the event of a divorce

What Cannot Be Included in a Prenup?

  • – Terms detailing anything illegal
  • – Decisions regarding child support or child custody
  • – Terms that could encourage divorce with financial incentives

What is a Postnuptial Agreement?

Once you are married, your individual assets become shared assets between you and your spouse. A postnuptial agreement is similar to a prenup in that it allows you to create an outline for how those assets should be divided in the event of a divorce or the passing of a spouse, but as we noted above, a postnuptial agreement can be made after you’re already married.

What Can Be Included in a Postnuptial Agreement?

  • – Division of property and assets after divorce
  • – Limitations for spousal support
  • – Division of debts (mortgage loan, credit card debt, etc.)
  • – Instructions for how to handle assets following the death of one spouse

What Cannot Be Included in a Postnuptial Agreement?

  • – Terms for child support and child custody
  • – Terms detailing anything illegal

Some couples opt for a postnuptial agreement simply because, through all of the excitement of planning their marriage, they never considered a prenup but still recognize the value of an agreed-upon division of assets.

What’s the Bottom Line?

Some think that the creation of a prenup or postnuptial agreement invites negativity into a marriage, but this certainly does not have to be true. People and their emotions will inevitably (and naturally) change over time. For some marriages, these changes lead to the realization that the spouses are no longer happy together. If this were to happen, or if one spouse were to pass away, having a prenup or postnup can save you from a great deal of heartache, headache, and financial stress. So rather than viewing such agreements as a “bad omen,” see them as a way to protect both yourself and your spouse if the unfortunate were to occur.

Consult a Family Law Attorney

Conniff Law Offices of Chicago and Oak Park invite those who may be unsure whether a prenup or postnuptial agreement is right for their marriage to contact us for a consultation. An experienced family law attorney from our team can discuss your options in greater depth with you and draft a marital agreement that addresses all of your needs.

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Divorce and Taxes: What You Need to Know

Taxes after divorce: Presently, this may feel like yet another unwelcomed stressor in your life. But armed with all the right information, you can navigate this new tax situation with greater ease. The family law professionals at Conniff Law Offices in Chicago and Oak Park are here to help with any stage of your divorce, and we have some tips for navigating the world of post-divorce taxes.

Know Your New Filing Status

The tax return form you use will depend on your marital status at the end of the year. The cutoff is at midnight on December 31 of the tax year in which you are filing. That means, for example, if you are divorced in 2020, you and your ex will be filing your 2020 taxes separately. If you have the minor children for a majority of the time, you may have the advantage of filing as Head of Household. If not, you will file under the status of a single taxpayer. You must check with your tax prepare to confirm your filing status.

Will Child Support and Alimony Affect Your Taxes?

Child support payments are not tax deductible for the person making them and do not need to be claimed as income by the person receiving them.

The answer for maintenance (spousal support) payments will depend on when your divorce was finalized:

  • – If your divorce was finalized after December 31, 2018, maintenance (spousal support) payments are not tax deductible for the person making them, and do not need to be claimed by the person receiving them.
  • – If your divorce was finalized before December 31, 2018, maintenance (spousal support) payments are deductible for the person making them, and must be claimed by the person receiving them, if and only if, your divorce documents include terms for tax deductible maintenance or spousal support.

What if your divorce agreement combines alimony and child support as one single “family support” payment? This would be treated like alimony and is, therefore, deductible to the payer and should be claimed by the recipient. However, we recommend consulting with a tax professional in complicated financial situations.

Be Aware of the Rules That Apply to Support

Maintenance (spousal support) payments that are “front-loaded” or concentrated within the first year or two following divorce may be labeled as a non-deductible property settlement by the IRS. Are you making or receiving maintenance payments that are scheduled to end within six months of your child’s 18th or 21st birthday? Know that the IRS may actually consider this to be child support disguised as maintenance. This is one of the many reasons it is recommended that you consult a tax professional when filing taxes after divorce.

Which Parent Will Claim the Children as Dependents?

Sometimes, your divorce agreement will state which parent is to claim the children as dependents. If not, the parent who has court-ordered physical custody of the children will claim them. Regarding joint custody, the parent who has the children for the most days during the tax year will claim them as dependents.

Claiming Head of Household With a Child

If your marital status by the last day of the year is “single,” claiming Head of Household would allow you to take a higher standard deduction. Note that you will need to have a qualifying dependent whose support you pay more than half of in order to claim Head of Household.  You must consult your tax advisor for further qualifying elements.

Protect Yourself By Filing Your Taxes Early

If things are going awry and your former spouse is threatening to claim the children even though you are the one who is entitled to do so, you should protect yourself by filing early in the year. If your ex does attempt to claim the children, the IRS would see that you have already filed and claimed them, and would require your ex to prove that they were entitled to claim them.

Don’t Overlook the Child and Dependent Care Credit

If, as a parent with court-ordered custody of children under the age of 13, you incur work-related child care for them, you may reserve the right to claim a tax credit of up to $1,050 for one child, or $2,100 for two or more children.

Change Your Withholding On Form W-4 If Necessary

If you are employed, it is often advantageous to review your withholding following major life changes. Your taxes after divorce, for example, may come with different withholding allowances from when you were married.

Consult With a Professional for Peace of Mind

Divorce and taxes can quickly become confusing and complicated, especially during the first year following your divorce. As such, it is strongly recommended that you consult with a tax professional who can help ensure you’re filing correctly and maximizing your refund.

If you have any lingering questions about divorce or custody, contact Conniff Law Offices or take a moment to browse our law blog to learn more.

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When Does Child Support End in Illinois?

If you’re in the middle of a divorce or separation, and children are involved, the question, “When does child support end?” may have come up. An Order for Support specifies an end date, which is usually the child’s 18th birthday, but not always.

There are situations where child support payments extend beyond the child’s coming of age. Non-minor child support is often extended and awarded if the child is:

  • – Still in high school
  • – Physically or mentally disabled
  • – Attending college

Illinois Child Support Beyond the Age of 18

The extent of non-minor child support in Illinois depends significantly on the situation:

  • – Child is Attending High School: If a child turns 18 while still in high school, Illinois allows child support to be extended until the child graduates or turns 19. Of course, the child is no longer a minor after they turn 18, but it is likely that the child still requires the parental support they needed at age 17. Be sure to double-check the Order for Support, and don’t assume this automatically applies to your case.
  • – Child is Disabled: The court can be petitioned for non-minor child support if the child is physically or mentally disabled. Child support payments can be paid indefinitely for disabled children who are not emancipated.
  • – Child is Attending College: Educational expenses can cause child support to be extended into adulthood. Both parents — as well as the child — can be ordered by a judge to split the costs of college or some other form of professional training. These shared expenses can include books, supplies, tuition, room and board, health insurance and more. There are limits, however. Child support payments typically aren’t extended past the point of a bachelor’s degree.

Non-Minor Child Support: What You Need to Know

Non-minor child support isn’t a legal requirement. For example, non-minor child support isn’t automatically required because the topic of college came up when child support was discussed during the divorce proceedings. To make the process simpler, you can go to court before the child reaches the age of 18 and come to an agreement with the other parent on how educational expenses will be paid. If no agreement can be reached, a judge will make a decision for the parties involved.

How do judges decide who pays and how much? Unless one parent is struggling financially and unable to make shared payments, divorcing or separating couples will receive an order for shared expenses that details how much the recipient is responsible for paying and for how long. Judges consider many factors when it comes to minor and non-minor child support, including:

  • -Both parents’ finances
  • -The quality of life the child would’ve had if the parents weren’t divorced or separated
  • -The child’s financial resources
  • -The child’s performance in school 

Reach Out with Your Child Support Questions

While there is a common answer to the question of when child support ends, the specifics of child support will vary from one family law case to another. At Conniff Law Offices, you’ll find experienced and compassionate family law lawyers in Chicago and Oak Park who are ready to represent your best interests. Contact us with any questions or to schedule a consultation today.

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4 Common Family Law Mistakes

Family law cases are often emotional in nature, which can lead to poor and reactive decisions. There are a lot of mistakes one can make in a family law case when they don’t seek legal representation. However, we’ve found four of them to be particularly common and detrimental to clients’ cases. When you have a Chicago divorce lawyer in your corner, there’s a much smaller chance you’ll make the following mistakes, which could cost you money, your parental rights, and peace of mind.

Not Getting Court-Ordered Parenting Terms

If you’re unmarried, failing to formalize parenting terms in court leaves you — and your child — extremely vulnerable.

When parenting terms aren’t outlined in a court order, the other parent can take advantage. They may deny you parenting time because they aren’t satisfied with the amount they’ve received from you, or aren’t happy that you’re moving on after the separation. They may even pick-up and move out of state with your child, which is considered “legal kidnapping.” If the court is overseeing decision-making powers, there are consequences to these behaviors.

Not Paying Child Support Through SDU (State Disbursement Unit)

Child support payments can be made in a variety of ways — money orders, personal checks, online payments, etc. Regardless, if you’re mailing a child support payment in Illinois, the mailing address should always be the following:

State Disbursement Unit

P.O. Box 5400

Carol Stream, Illinois 60197-5400

Unless the court-issued child support order explicitly says to do so, child support payments should never be made to the other parent. If child support is paid to the other parent, they may say money is still owed, whether they’re intentionally trying to obtain more money or lost track of what was paid to them. Either way, the paying parent can end up owing an alleged arrearage, which they’ll have to fight to avoid paying by going to court.

Litigating Every Aspect of Decision-Making for a Child

Divorce litigation is daunting for parents, but can be even more daunting for children who never ask to be involved. Over-litigating decisions regarding child care can lead to unneeded stress for parents and children. Decision-making powers (formerly known as child custody) don’t concern child support; they concern parenting time and allocation of parental responsibilities.

While both parents have a say in child care, education, and medical care, if one is the “majority” time parent, it may be worthwhile not to litigate each of their proposed decisions unless it truly is harmful to the child.

Navigating a Child Support Case Alone

This can apply to any Chicago family law case. However, when it comes to a child support case, you’ll always be vulnerable without legal representation. The Illinois Department of Healthcare and Family Services is unbiased, but that doesn’t necessarily mean your best interests will be considered every step of the way. That’s why it’s helpful to enlist an Oak Park divorce lawyer experienced with child support.

Our team of legal professionals will make sure you’re ordered to pay a fair amount of child support, benefiting you and your child.

Avoid These Mistakes When You Turn to Conniff Law Offices

Whether you need assistance with asserting your parental rights or proceeding with a child support case, Conniff Law Offices can help. Our Chicago and Oak Park family law firm is here to guide you through these often emotional situations with expertise, determination, and care for you and your family. Schedule a consultation today.

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