While you earned your CFL Designation, you learned a lot about the financial aspects of divorce and the importance of staying on top of changes in state laws.
Ohio is among the states that have made major adjustments to their divorce laws recently. After more than 20 years, this spring, the Buckeye State modified how child support is calculated. We’ll cover how this and the new federal alimony tax laws will affect your practice.
Like other states, per the Tax Cuts and Jobs Act, for divorce cases completed after January 1, 2019, alimony payments are no longer deductible for the payor or taxable to the recipient. The federal government can make an exception if a separation agreement was in place that kept the prior tax treatment and was signed before the end of 2018.
Unlike child support, Ohio laws don’t set alimony amount payments. The Ohio Revised Code section 3105.18 lists 14 rules courts consider when determining the amount and length of an alimony award.
Because of the removal of taxability, alimony settlement amounts may be lower by 20 percent or more compared to past years.
Child Support Adjustments
On March 28th, the state of Ohio changed the way child support is calculated to more accurately reflect the cost of living and raising a child today.
Divorcing spouses can still make child support modifications for major income shifts such as a job loss or an increase in child care costs. The modifications aren’t retroactive, but are effective from the date of filing.
Some of the most important changes in the calculations include:
- An automatic ten percent reduction in the child support amount when the payor has a “standard parenting time order” of 90 nights or more and the payor is following the parenting time.
- The economic table formulas that set the amounts owed for support based on both parents’ incomes now include an increase in the income “cap” of up to $300,000 in combined earnings.
- A cap on the amount of child care expenses added to a child support order, determined by the age of each child and the number of children.
Taxwise, paying spouses will receive a standard income deduction for each child, treating them equally even if they are under different child support orders. This removes the “first to file” advantage the payor had when he or she was subject to more than one child support order.
Other adjustments based on income include a “self-sufficiency reserve” for lower income earners to cover their expenses after they’ve met their child support obligations. The law also limits when a court can assign income to one of the parties when they’re disabled.
Finally, in shared parenting cases with equal parenting time (over 147 nights), the court must explain why it won’t grant a downward deviation in the child support guideline amount.
Stay ahead of the latest changes in family law with a CFL™ Designation. The financial knowledge you gain expands your expertise and gives you a “leg up” on other practitioners. Get our free information packet today!