In Illinois, the child support guidelines change dramatically as of July 1, 2017. Until July 1, 2017, in Illinois child support has been based on a simple percentage of net income depending on the number of children. Starting July 1st, Illinois adopts an income sharing approach that considers the net income of both parents and radically changes child support awards in Illinois divorce and paternity cases.
Child support can be set at a lower or higher amount (known as a deviation) and often the court may require the parent to contribute to some of the children’s health care, child care, education and extracurricular expenses.
In an Illinois divorce or paternity suit, is the amount to be paid for child support predictable?
Not exactly. The law regarding child support is in a great deal of flux. The Illinois legislature prescribed child support guidelines that are effective through to July 1, 2017.
Is “net income” the same as take home pay?
No. Through to July 1, 2017, Illinois law defines net income. It is gross income “from all sources” minus certain deductions:
- Federal and State tax;
- Social Security;
- Mandatory Retirement Contributions [no longer normally deductible except in certain cases commencing 7/1/17]
- Union Dues [No longer deductible for cases applying the new law commencing 7/1/17];
- Health Insurance Premiums [previously health insurance premiums were deductible for the individual and for the children covered. This changes under the new law commencing 7/1/17];
- Court ordered life insurance premiums to secure payment of child support [No longer deductible for cases applying the new law commencing 7/1/17];
- Former court ordered child support or maintenance obligations actually paid [certain expenses may be deductible under the new law based upon what is now called the multi-family adjustment];
- Repayment of business debts [rewritten under the new law with a focus not on whether there are business debts but ordinary and necessary business expenses].
How is net income determined started July 1, 2017 in Illinois divorce and paternity cases?
There are two approaches to determine net income under the income sharing amendments. The first approach uses a “standardized tax amount” and the second approach uses an “individualized tax amount.”
Explain how the standardized tax amount works started July 1, 2017:
Determine Federal and State taxes not based on the actual amount paid in taxes but assuming one would file as a single person claiming the standard deduction with one personal exemption (yourself) and the number of dependency exceptions for the minor children. Also, deduct social security and Medicare taxes. See: Chart for Conversion of Gross to Net Income.
What’s this about an “Indivualized Tax Amount”?
This approach uses the actual taxes that are paid rather than just assuming standard deduction, etc. It is a more accurate approach and will be used in higher income cases to be fairer to each party. This approach considers all relevant tax attributes such as filing status, the actual allocation of the dependency exemptions, and whether a party claims the standard or itemized deductions.
Is income from overtime, second jobs, bonuses, commissions, etc. considered “income?”
Yes. The Illinois statute says that income from all sources is considered for child support. Thus, rental property income, stock dividend income, interest income, etc., are considered income for the purpose of calculating child support. The 2017 law based on the trailer bill” now passed by both Houses, provides:
“[G]ross income” means the total of all income from all sources, except “gross income” does not include:
(i) benefits received by the parent from means-tested public assistance programs, including, but not limited to, Temporary Assistance to Needy Families, Supplemental Security Income, and the Supplemental Nutrition Assistance Program or
(ii) benefits and income received by the parent for other children in the household, including, but not limited to, child support, survivor benefits, and foster care payments.
I am self employed and have overhead expenses. Can I deduct from my gross income all of my overhead expenses?
The answer changes effective July 1, 2017. Under Illinois law prior to July 1, 2017, the advice given was to run the business like a business and to keep personal items separate from business expenses. This remains good advice. But commencing July 1, 2017, Illinois law is more sensible and would allow a self-employed person to deduct business expenses.
Illinois law effective July 1, 2016 Illinois child support law will provide:
Business income. For purposes of calculating child support, net business income from the operation of a business means gross receipts minus ordinary and necessary expenses required to carry on the trade or business. As used in this paragraph, “business” includes, but is not limited to, sole proprietorships, closely held corporations, partnerships, other flow-through business entities, and self-employment. The court shall apply the following:
(A) The accelerated component of depreciation and any business expenses determined either judicially or administratively to be inappropriate or excessive shall be excluded from the total of ordinary and necessary business expenses to be deducted in the determination of net business income from gross business income.
(B) Any item of reimbursement or in-kind payment received by a parent from a business, including, but not limited to, a company car, reimbursed meals, free housing, or a housing allowance, shall be counted as income if not otherwise included in the recipient’s gross income, if the item is significant in amount and reduces personal expenses.
Can the Illinois court order less than the guideline amount?
I have a high income and one child. Paying the guideline percentage of my net income for child support would produce child support that is way beyond a child’s needs. Can the court order less than guideline child support?
Yes. A child support obligor who is in a very high income bracket may not be required to pay the statutory percentage of child support. The 7/1/17 law based on the technical correction legislation will provide:
Income in excess of the schedule of basic child support obligation. A court may use its discretion to determine child support if the combined adjusted net income of the parties exceeds the highest level of the schedule of basic child support obligation except that the basic child support obligation shall not be less than the highest level of combined net income set forth in the schedule of basic child support obligation.
Under the Income Sharing Amendments, how far will the charts go up for the net income?
The charts go up to $360,000 of net income per year ($30,000 per month.). Once net income exceeds $360,000 annually, the presumptive minimum basic award of support is not less than the highest level of support set forth in the charts. The court has discretion in these cases other than setting support at the highest level per the support guideline tables.
In addition to child support, can the child support obligor be required to pay other expenses of the children?
Yes. The usual add-ons to the basic child support obligation are reasonable:
- Reasonable school expenses;
- Extracurricular activity expenses.
The other add-ons are allocated between the parents include;
- Child care expenses;
- Health care needs not covered by insurance.
The July 1, 2017, law is complex regarding the issue of the allocation of child care expenses, health care needs and health insurance. Advice from counsel is necessary to address the requirements of the new statutory law.
Does child support stop at age 18 of a child?
Not necessarily. The law provides that support generally terminates at age 18 or of a child is still attending high school up to age 19. It is important to consult with a lawyer when child support is to terminate.
If my income fluctuates, will my child support be based on an average of past income?
Child support is often based on current income (year-to-date earnings) projected to year end when an individual receives a steady pay-check but the amount has risen in the last year. The income tax returns for the last few years will often demonstrate whether or not there are bonuses or other variable income.
If, however, the child support obligor’s income fluctuates significantly from year to year, there have been two approaches: the base plus percentage approach and an income averaging approach. Under the July 1, 2017 law, things become more complicated because the income sharing amendments consider the income of both parents and the percentage differs depending upon the income with relatively higher percentages being paid at lower income levels and lower percentage being paid at higher levels. Because of these complicating factors, it is suggested that an income averaging approach will be used with greater frequency under the income sharing amendments. An income averaging approach often uses the average income over a period such as the last three years, so long as those years are representative of likely future income.
Proactive advice from an experienced matrimonial lawyer in this regard is essential.
Must child support be payroll deducted?
Child support must be withheld from the obligor’s employment income and paid through the State Disbursement Unit (SDU) if the recipient is receiving public aid, or the support payments are made through income withholding. There is an exception in cases where there is a signed written agreement providing “an alternative arrangement, approved and entered into the record by the court, which ensures payment of support.”