Posted on July 31, 2022

Is Maintenance (Formerly Known As Alimony) Tax Deductible In Illinois?

The more money you make, the more you realize that there is the price you pay for things…and the price you pay for things after taxes.

The taxability (or lack thereof) of maintenance (formerly known as alimony) should impact the settlement negotiations of your divorce as you may have to write one check to your spouse…and another check to the IRS.

Who Pays The Taxes On Maintenance During Or After An Illinois Divorce?

If are required to pay maintenance during or after an Illinois divorce you will not be able to deduct those payments from your gross income for tax purposes.

Likewise, if you receive maintenance in Illinois, you will NOT pay taxes on that maintenance.  

It didn’t always used to be this way. In fact, it used to be the opposite. Bizarrely, you can only understand why maintenance tax-deductions work the way they do today if you understand how tax deductions for maintenance used to work (because those laws have now been erased).

Who Pays The Taxes On Maintenance On A Divorce Finalized Before 2019?

Before Dec. 31, 2018 all maintenance payments were taxable to the person who received the maintenance.

“Gross income includes amounts received as alimony or separate maintenance payments” 26 U.S. Code Section 71(a)(2011)

The ex-spouse who received maintenance would include their maintenance as part of their gross income for tax purposes.

Likewise, the maintenance payor, was allowed to deduct those maintenance payments from their gross income for tax purposes

“In the case of an individual, there shall be allowed as a deduction an amount equal to the alimony or separate maintenance payments paid during such individual’s taxable year.” 26 USC § 215(a) (2011)

Then came the Tax Cuts and Jobs Act of 2017 which said “Part VII of subchapter B is amended by striking section 215“ and “Part II of subchapter B of chapter 1 is amended by striking section 71” (Tax Cuts and Jobs Act (TCJA), Pub. L. No. 115-97 (2017))

This new law eliminated the two clauses that made maintenance tax deductible for the maintenance payor and taxable for the maintenance recipient.

The Tax Cuts And Jobs Act’s changes to the taxability of maintenance are applicable for any “divorce or separation instrument…executed after December 31, 2018” Pub. L. No. 115-97 (2017))

Why did they change this law? Why should the maintenance payor have to pay twice, once to their ex-spouse and again to the IRS?

Apparently, the average maintenance recipient simply wasn’t declaring their maintenance payments. It’s not like you had to issue your spouse a W-2 for the maintenance payments you made. So, the IRS wasn’t getting paid on any of that income.

If your divorce was finalized before 2019, the maintenance payor is able to keep deducting the maintenance payments from their gross income in the years going forward.

“Effective Date.—The amendments made by this section [of the Tax Cuts And Jobs Act] shall apply to—

  • any divorce or separation instrument (as defined in section 71(b)(2) of the Internal Revenue Code of 1986 as in effect before the date of the enactment of this Act) executed after December 31, 2018,” Pub. L. No. 115-97 (2017))

Modifications of pre-2019 maintenance orders shall not affect the taxability of the maintenance if the modification order so specifiesthat “the modification expressly provides that the amendments made by this section apply to such modification.” Pub. L. No. 115-97 (2017))

This preservation of pre-2019 tax deductibility should be brought to the attention of the court by one of the parties as courts shall consider “the tax consequences of the maintenance payments” 750 ILCS 5/510(a-5)(4).

It is one thing to know the rule that maintenance is not tax deductible to the payor but is tax deductible to the recipient. It is another thing to know exactly why the rule is that way.

I do not practice divorce law via rumor. I look up the rule in the Illinois Marriage And Dissolution of Marriage Act, then I look for corresponding case law, then I seek out relevant federal law and regulations which impact the state laws, finally, I write about how all those rules and laws interact. This way, my thinking and communication regarding the issue are clear to myself, my client, my opposing counsel and the judge.

That is what I would want if I hired a divorce attorney. So, I hold myself to that standard.

If you would like to discuss how your maintenance will be taxed and how that could impact your argument for or against maintenance, contact my Chicago, Illinois family law firm to speak with an experienced Illinois divorce attorney.

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Russell Knight

Russell D. Knight has been practicing family law as a Chicago divorce lawyer since 2006. Russell D. Knight amicably resolves tough cases while remaining a strong advocate for his client’s interests.

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