Unemployment and Child Support or Alimony - 2/20/09

Kim: A viewer e-mailed in and asked: If he loses his job and starts to receive unemployment, will he still have to make his child support and alimony payments? Unfortunately, in these tough economic times, issues like this are going to pop up more frequently. Here to answer these questions is attorney Michael Solomon.

Mike: The answer is different for child support and alimony.

Child support:  If your income changes because you lost a job or you found a new job but are earning a lot less, you should contact the Child Support Enforcement Agency and tell them your situation.  They will recalculate your child support payments. You can contact them at 216-443-5100 or visit their web site.

Alimony: Alimony will be determined by the divorce decree. Generally, alimony payments cannot be changed because you have lost your job. However, you should review your divorce document to see if it has any flexibility.

Generally, there is no good solution. Bankruptcy will not get you out of these obligations. You should contact the attorney who represented you in the divorce to see if he can help you work out some sort of deal with your ex-spouse. Good luck.

Kim:   The same viewer wondered if he would owe any income taxes on unemployment payments.

Mike:  There is some good news on that front, if you can have any good news on being unemployed. Under the new tax law, up to $2,400 of unemployment compensation received in 2009 is excluded from income. 

There was another major change in the tax law that will help the unemployed. One of the big concerns that everyone has is health insurance coverage. If you are fired, under Federal Law, COBRA employers who have 20 or more employees have to allow you to purchase your health insurance for 18 months. The problem is that if you’re unemployed you may not be able to afford health insurance premiums that could cost you well over $1,000 per month.

The new tax law provides the following benefit.

* Premium Subsidy.  The government will subsidize approximately 65% of the premiums for up to 9 months. The ex-employee only pays 35% of the premium.

* Who is eligible?  You have to be fired sometime from 9/1/2008 though the end of 2009. If you are fired for gross misconduct, you are out of luck.

 * Do I have to repay?  There is no repayment obligation unless your adjusted gross income is above $145,000 or $290,000 if married filing jointly. Then you have to repay the subsidy when you file your tax return.

Kim. Thank you.  At least a few of these new tax breaks soften some of the blow from losing your job. If you have any more questions for Michael, e-mail us at weekendmorningshow@wkyc.com, and he will try to answer your questions next week.