In this article, we explain unallocated support in Illinois divorce. We discuss:
Generally, in a divorce, when child support and spousal maintenance are both deemed by the court to be appropriate, the amount that the payor is required to pay toward each will be determined separately according to statutory formula, agreement, or the discretion of the court.
However, prior to 2019, parties to a divorce in Illinois had the option to agree to combine child support and spousal maintenance into one lump number called unallocated support. In these cases, no distinction would be made between how much of this combined payment was for child support and how much was for spousal maintenance.
The primary reason that parties to a divorce would agree to unallocated support is that it tended to be more tax efficient than distinct payments for child support and spousal maintenance.
Prior to 2019, spousal maintenance and unallocated maintenance payments were tax deductible to the payor and counted as taxable income to the recipient. However, child support was not tax deductible to the payor.
This meant that if the payor was in a higher tax bracket than the recipient, the parties collectively could save on taxes by treating payments that would otherwise have been child support as unallocated support so that the payor in the higher tax bracket would be able to take the payments as a tax deduction.
This left more money for the couple and less for the government. This meant that the recipient would receive more in unallocated maintenance than he or she would have if the payment were treated as child support without the payor paying any extra. The government would simply receive less in taxes.
It should come as no surprise that the government changed the law to eliminate this tax efficiency. Unallocated support is not available for divorce orders entered on or after January 1, 2019.
In addition, spousal maintenance is no longer tax deductible for the payor. For more on this, check out: Changes to Illinois Spousal Maintenance Law for 2019.
However, unallocated support orders that were entered prior to January 1, 2019 are grandfathered in. The unallocated support dictated in the order is still paid as unallocated support and is still tax deductible.
Either party can modify the amount that is paid in unallocated support by filing a motion to modify unallocated support with the court that issued the order and demonstrating a substantial change in circumstances for either party or the children involved. The change in law that occurred in 2019 is not in and of itself a basis for modification.
The process for modifying unallocated support is basically the same as modification of spousal maintenance, which you can learn about here: Modification Spousal Maintenance in Illinois.
If either parties seek to modify an unallocated support order now that the law has changed, they can choose by agreement to apply the previous version of the law so that even though the amount of support may change, it will still be treated as unallocated support and still remain tax deductible to the payor. Generally, if unallocated support was the best option for both parties when the original order was entered, it will remain a better option than applying the new law.
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