Spousal SupportThe "Spousal Support Predictor" found in Iowa Support Master is intended to be merely a guide. It is found under the "Special Ops" button. Iowa has not adopted spousal support guidelines. Use this feature, as with all, as a guide. Conduct your own research.
If spousal support is involved, make sure you remember to perform step-down calculations. Failing to do so could cost your client dearly.
Effective January 1, 2018, in your case, if a party pays traditional or rehabilitative spousal support to the other party, those monies are included as income to the recipient and deducted from the payor's income. Prior obligation of traditional/rehabilitative spousal support actually received pursuant to a court order is still included.Reimbursement spousal support is not added or deducted. It is excluded.
2018 Tax Consequences: the payor of spousal support must pay FICA on the spousal support obligation. The recipient must pay state and federal taxes. Iowa Support Master will perform the calculations for you.
2019 Tax Consequences: the payor of spousal support must pay all taxes, including FICA, on the spousal support obligation. The payor may no longer deduct the amount being paid. The recipient pays no taxes or FICA on spousal support received come January 1, 2019.
Sample Case Using 2018 ISM
- NCP income $250,000. CP income $0
- 1 child. NCP claims child, files single. CP claims 0 files Head of Household
- NCP will pay $4,000 per month spousal support ($48,000 yearly)
- NCP pays FICA on spousal support. CP pays State/Fed taxes on spousal support
- Child support $1,445 per month
- Result: NCP takes home $10,008 per month
- Result: CP takes home $5,000 per month
Using the same set of facts above, now check the box in the "Spousal Support" screen for 2019 numbers.
- Child support $1,283 per month
- Result: NCP takes home $8,419 per month
- CP takes home $5,097 per month.
In the above example, you can see that the NCP's taxes went up an average of $1,600 per month because of the tax consequences. CP's income increased only slightly.
Survival GuideCheck out our free Child Support Calculation Survival Guide!