2019 Tax Law Changes Drastically Impact Divorces -Don’t Be Caught Uninformed

 

Effective January 1, 2019, there are new tax laws that will significantly impact divorces. The first new tax law (and perhaps the most drastic) provides maintenance (formerly alimony) payments will not be deductible by the person paying it or treated as income for the person receiving it. As a result of the new tax law, divorcing spouses will likely more aggressively contest the amount of maintenance in cases where maintenance is appropriate.

However, those divorced on or before December 31, 2018 are grandfathered in, so the maintenance payments continue to be deductible by the person paying it and taxable to the person receiving it.

Important to note if those grandfathered in seek modification after January 1, 2019, the tax treatment of the modified maintenance will be governed by the parties’ agreement/judgment. If the parties want the modified maintenance to be taxed under the new tax law, they must specifically provide that in the modification order.

For those who have a pre- or post-nuptial agreement, the new tax law may nullify parts of those agreements, so it’s wise to see your lawyer and financial advisor.

Finally, couples who are divorcing on and after January 1, 2019 should be aware that children won’t offer the same tax benefits as before. The new law eliminated the $4,050 exemption for each dependent, but the child tax credit doubled from $1,000 to $2,000 per qualifying child.

These law changes make it critical you seek the advice and guidance of a divorce specialist. Call Nicholas J. Galasso now at 630-949-2061 or access our website at www.GalassoPC.com and schedule a free consultation.

 

Paid Family Leave Coming to Illinois?

HB 9 Seeks to Create the Paid Family Leave Act in Illinois

The Family Medical Leave Act of 1993 (FMLA) provides eligible workers with a federal entitlement to unpaid leave for a limited set of family caregiving needs.[i]   In short, FMLA merely provides eligible employees with the right to take (unpaid) time off for specified reasons without the fear of losing their job.  There is no federal law in the United States that requires private-sector employers to provide paid leave of any kind.[ii]

As of September 2018, six states and the District of Columbia have created family leave insurance (FLI) programs, which provide cash benefits to eligible workers who take a leave from work to engage in certain caregiving activities.  California, New Jersey, New York, and Rhode Island have active programs; the District of Columbia, Washington State, and Massachusetts have passed laws creating FLI programs, but those programs await implementation.[iii]

Illinois Representative Mary E. Flowers (D) of the 31st District introduced legislation on November 30, 2018 to create the Paid Family Leave Act in Illinois.  The status and text of the bill, HB 9, may be found here: HB 9 – Bill Status.

As introduced, the Paid Family Leave Act created by HB 9 can be summarized as follows:

  • Applies to private employers with 50 or more employees.
  • Employers must provide six (6) weeks of paid family leave for an employee who takes leave for one of three reasons:

(1) because of the birth of a child of the employee and in order to care for the child;

(2) to care for a newly adopted child under 18 or a newly placed foster child under 18 or a newly adopted or newly placed foster child older than 18 if the child is incapable of self-care because of a mental or physical disability; or

(3) to care for a family member with a serious health condition.

  • These paid leave benefits apply to employees who have been employed by the employer for at least one year, and these benefits apply regardless of an employer’s leave policies.

The legislation as introduced is skeletal and will undoubtedly need refinement before becoming a viable piece of legislation suitable for enactment.

The big unknown at this juncture is how much support there is or will be for HB 9 and its goal of creating a paid family leave program in Illinois.

The United States is the only industrialized nation without paid family leave.[iv]   Paid family leave at the federal level is an issue to watch in the upcoming 2020 presidential election.  The majority of those individuals who have declared their candidacy for the Democratic Party’s nominee for president are proponents of paid family leave.

It is likely only a matter of time before a federal law is enacted that entitles eligible employees to paid family leave.  How soon and on what terms is anyone’s guess.  And time will tell if Illinois joins the minority of states in adopting its own paid family leave program.

We welcome the opportunity to discuss your legal needs and offer a free consultation. Please call Nicholas R. Galasso at (630) 949-2062.

 

 

[i] Congressional Research Service Report R44835, “Paid Family Leave in the United States,” updated September 12, 2018.

[ii] Id.

[iii] Id.

[iv] https://www.politifact.com/truth-o-meter/statements/2016/jul/25/kirsten-gillibrand/yes-us-only-industrialized-nation-without-paid-fam/ (accessed January 30, 2019).

 

 

 

 

Paid Family Leave Coming to Illinois?