The first thing that every potential client needs to understand is that family law attorneys in Illinois are not licensed to give tax advice. So, for specific information regarding your taxes, you have to consult a tax professional such as an Accountant, who is licensed to give you tax advice. Generally, under Illinois law, child support, by itself, is not taxable to the obligee (the person that is receiving the support). Child support is calculated using net numbers when it is calculated pursuant to the Illinois Marriage and Dissolution of Marriage Act, Section 750 ILCS 5/505. This means that the obligor (or the payor, the person paying support) is entitled to certain deductions before child support is calculated. Two of the deductions required under 750 ILCS 5/505 are Federal and State Income taxes withheld. So, the obligor (or payor) doesn’t pay child support on monies that are being paid as taxes to the government. This makes child support, generally not taxed.
There are a variety of different types of spousal support that you can be awarded, and whether or not the maintenance or spousal support is taxable to the obligee (the person receiving it) depends upon what type of support is being paid. Most maintenance is taxable to the obligee. However, there are situations where parties may agree to non-taxable maintenance, in the form of maintenance in gross.
Finally, there are situations where child support could be taxed. Specifically, child support can be taxed if it is lumped together with maintenance and titled as “unallocated support”. The lump sum of “unallocated support” is generally taxable, in its’ entirety.
The bottom line is that whether or not your support is taxable depends upon what you and your spouse agreed to, or, what your Judgment for Dissolution of Marriage says. There are a variety of ways to make support taxable and a variety of ways to make support not taxable, and the methods used vary based upon each individual parties’ circumstances. However, while your attorney generally can tell you if support award will be taxable to you, attorneys cannot give tax advice. So, when you are trying to determine if the support you are paying or receiving will be taxable or tax free, it is always best to meet with an Accountant, Tax Attorney, or other tax professional licensed to give you tax advice, so that you can see what the positive and negative consequences will be for each scenario.