Couples choosing to divorce often have financial issues to settle. As you might expect, those issues often wind up in court. Divorce courts routinely have to make decisions regarding maintenance payments and child support. No, the two things are not the same.
Maintenance payments, also known as alimony, are payments made by one party to the other to make up for lost income as a result of the divorce. Child support is paid to the parent who has primary custody of minor children, for the purposes of financially supporting them.
- No Hard and Fast Rules
The thing about maintenance payments and child support is that there are no hard and fast rules courts must follow. ABM Family Law, a Chicago family law firm, says Illinois courts look at a long list of factors before making maintenance and child support decisions. As child support attorneys, they say courts tend to be more favorable to increased payments when kids are involved.
Child support is rooted in the idea that the parent with primary custody will invest more time and financial resources in caring for the children. The other parent contributes financially through child support payments. Though this often means the father paying child support to the mother, it doesn’t necessarily have to be that way.
Child support attorneys have been known to petition courts to require support payments from the spouse earning the most money, regardless of which party that is. Sometimes it ends up that the mother makes child support payment and the father provides most of the care.
- Length of Payments
In addition to determining who pays and how much, courts also have to decide how long payments will continue. Child support payments are pretty straightforward in this regard. They generally continue until minor children reach legal adult status. One exception is a situation in which an adult child is mentally or physically disabled to the extent of requiring permanent parental care.
Maintenance payments are a little more difficult to determine. Courts have to look at the receiving party’s circumstances, including financial needs and any harm done to that person’s earning power as a result of the marriage relationship. Courts also look at how long the couple was married.
In most cases, maintenance payments are not permanent. They are intended to help the party with limited earning power get back on their feet in the months and years following divorce. It is highly unusual for one party to have to fully support the other party for the rest of their life.
- Payments and Tax Implications
One thing about maintenance and child support that does not get talked about a lot is tax liability. Yes, the government even has its hands in these two areas. For starters, all maintenance payments are taxable at the federal and state level. They are calculated based on the payer’s gross income for that reason.
Who pays the taxes on that income? The receiving party. The paying party can write maintenance payments off as a tax deduction. The reasoning is simple: that money is no longer income to the payer. It is income that is transferred to the recipient. Therefore, the recipient pays income taxes on maintenance payments.
Child support payments are not taxable. Furthermore, they are based on the payer’s net income. That is to say that when payments are calculated as a percentage of the payer’s income, courts consider only after-tax income.
Maintenance payments and child support are two different things. Courts have a lot of discretion in how they handle both. Unfortunately, divorcing couples know this all too well.