Child support is defined as the amount of money that a single parent or both parents are ordered to pay every month to raise their child/children. The judge uses a statewide guideline to determine the amount of child support needed, and after deciding, he/she issues a child support order. While this may sound like an easy process, child support cases are complex and emotional, and they involve other legal matters like divorce.
How a Court Determines Child Support
The child support laws are established at the state level. According to the law, every parent is responsible for the child’s financial support. The parent's income and the amount of time each parent physically spends with the minor are factors that the court will use to determine the child support order.
How Long is a Parent Supposed to Pay For Child Support
According to California law, a parent is supposed to pay child support until the child:
- Turns 18 years old and has completed high school. Any minor who is a full-time or part-time high school student will still be eligible to receive child support.
- Turns 19 years
- Gets married, passes away, or becomes legally free in other ways(e.g., Joining the airforce).
Also, if the child is disabled and cannot support his/herself even when he/she becomes an adult, the court can order both parents to continue with the child support.
How is Child Support Calculated?
As stated earlier, the California court uses two main factors to determine the guideline of child support. These factors are:
- Disparity of timeshare
- The disparity of income between parents
The Disparity of Income
If the disparity between the parent’s income is high, the child support obligation also becomes high. For instance, if parent A makes $200,000 per year, and parent B makes $40,000 in a year, parent A will pay a considerable share of the child support. But if both parents make almost equal amounts, the child support will be less.
Disparity of Timeshare
It also applies in this; if there is a massive difference in the amount of time each parent spends with the child, the child support will be higher. For instance, If parent A has 30% of the time and parent B has a 70% timeshare, parent A will pay a significant amount of child support. But if both parents have the same timeshare with the child, the child support is less. To better explain this, the parent who spends more time with the child will need more child support because the parent is likely to spend a lot on clothing, feeding, housing, and supporting the child in general.
Most people assume that if the timeshare and the incomes are equal for both parents, there should be no child support. Note that these are just factors used in calculating child support. If both parent A and B have the same amount of income, but parent B has a 15% timeshare, he/she will have to pay parent A for child support. Similarly, if both parent A and B have an equal timeshare, but parent B’s income is much higher than parent A’s, there will be child support.
Since the formula used is very tricky for most people to understand, a couple of computer software is used to calculate the child support guidelines. The commonly used software is “ XSpouse™, and SupporTax®, DissoMaster™.” The information that is added to the program to run the support numbers is more important than the program itself. To come up with the correct amount of child support, you must enter the right income for each parent and the correct timeshare. The child support calculators only provide the proper amount depending on the data entered.
The effective formula used to determine shield support is:
CS = K[HN – (H%)(TN)]
CS is the amount of child support.
K is the amount from each parent’s income that is set aside for child support.
HN stands for disposable income from the high earning parent.
H% is the approximate child’s timeshare of the high earning parent.
TN is the total monthly net set for child support from both parents.
In instances where K = 1+ H% or K = 2- H%, another fraction is added. The CS is multiplied by a factor ranging from 1.6 for two kids and 2.86 for ten kids for more juniors. Also, note that there are a few other nuances and expectations for this formula. It is not a surprise that California depends on computer software to help with these calculations. It is vital to master the factors that add up the variables rather than understanding the formula.
Certain deductions and income that affect the guideline calculation of child support include:
Salary/wages
This is income subject to the employment tax. During the calculation of child support, this is the necessary amount before paying tax or tax deductions. In California, for tax filing purposes, most people receive a W-2, which is contemplated as salary or wages. While deciding the salary/wages, It is crucial to find out how often a person gets an income. Did you know that the frequency of the pay periods affects the average income of a person? See below:
- Bi-weekly — If you are paid bi-weekly, it means you have 26 pay periods every year. Most people paid on a bi-weekly basis receive their paycheck every other week on the same day, either on Friday. If, for instance, you are paid $10,000 bi-weekly, it means you have 26 pay periods a year. If you multiply $10,000 by 26 pay periods, the answer is $260,000, which is your annual income. Now divide $260,000 by 12, resulting in $21 667, the average monthly payment.
- Semi-monthly — If every month you receive a total of two paychecks, your pay period per year is 24. Most semi-monthly employees are paid on two same days every month. Mainly on the 15th and 30th of every month. If you are paid $10,000 on a semi-monthly basis, it means you have a total of 24 pay periods every year. Multiply $10,000 by 24, the answer is $240,000. Divide this by 12, and the answer is $20,000, which is your average monthly income.
If you miscalculate your income, it can cause inflation or deflation of your payment by $20,000, and this single mistake has a significant impact on child support.
Self-employment income
Most self-employed people get 1099 for tax filing, while others use a C for their tax returns. (a profit and loss statement). Self-employment income is not taxed the same as the salary/wages; it is vital to characterize this type of payment and avoid entering it under salary/wages.
Most people do not understand their employment status, and they think that they cannot be self-employed because they work for a particular company. Due to child support and tax purposes, independent contractors are considered self-employed. The easiest way to know if you are self-employed, look at your paycheck; if the taxes are not withheld, you are considered self-employed.
Voluntary Retirement Contributions
Some employees are given Defined Contribution Plans like Simple IRA accounts, 401(k), 403(B), Thrift Savings, and Plans (TPS) by their employers. As the employee, you have a choice to contribute pre-tax income to any of the plans to a specific amount yearly. Although the employer’s contributions do not affect child support, these pre-tax employee contributions significantly affect child support. Mainly because child support calculation is based on net disposable income, taxable income can also be lowered by the voluntary retirement contributions, and untaxed income does increase the net income. In short, The more the net income, the more revenue there is to pay child support, or in other words, there will be less need for child support.
Take note of the maximum contribution amounts since every year; there are different—the maxim contributions for people above 50 years increases. Different people have different ways of making their contribution. Some contribute a constant amount throughout the year, while others make extra contributions during the first months. Note that the average retirement contributions for each month should not surpass the maximum yearly donation.
New Spouse Income
Those people who wed after a divorce are always cautious of disclosing the income of their new spouse. You may feel like you're invading their privacy and, worst of all, that their income will be used on child support, which is not fair for them. If you have remarried after divorce and your new spouse are filing taxes jointly and paying child support, you must disclose your new spouse’s income. Although it may seem contradictory, it is vital since child support is calculated based on the net income. Your new spouse’s income is likely to cause an increment in the overall tax liability on your income because the two income sources will lead to higher taxes. An increase in taxes reduces your comprehensive net income. Although it is beneficial to file taxes jointly as a household and the new spouse's income, your net income as the payor of the child support will be lessened. Note that the lower the net income, the less the child support.
Also, note that your new spouse’s income will not be used in calculating child support, and this rule has no exceptions. Even the shares of your new spouse are not used in calculations. The only effect that your new spouse’s income has on child support is on your tax bracket. Additionally, you have to disclose your new spouse’s payment for the law to come up with a correct net disposable income. Representing the net income correctly will benefit you as the child support payor.
The parent getting the child support may find this unfair, immensely if your new spouse helps spouses income a better life. However, child support is determined by what each parent is earning.
Other Non-Taxable Income
Most people working in the military are always shocked after realizing that their tax-free allowances like the Basic Allowance for Subsistence and Basic Housing Allowance are regarded for child support. The value of housing for militants is always credited as tax-free income even though the military member is living on base. According to California law, income available for support is defined as income regardless of its source. This also includes employment benefits.
Another major category for non-taxable income includes disability benefits. Some of the disability benefits include:
- Federal Disability (for example, SSI or SSDI)
- State disability (CASD) and
- Other private insurance disability benefits.
Though at times when the disability income is partially taxable, it is often tax-free. These benefits are also regarded as income available for child support.
Health Insurance Premiums
This premium insurance is derived from the net disposable income. In short, money that is accorded the health insurance premium is not included in the child support calculations. This applies regardless of whether the contributions and pre or post-tax. Also, note that the following are not regarded as health insurance premiums:
- Flexible spending account (FSA)
- Voluntary pre-tax contributions to your Health Savings Account(HAS)
- Other out-of-pocket expenses like deductibles or copays
Itemized Deductions
Mortgage interest deductions and property tax are some of the significant itemized deductions. People with escrow or impound accounts pay their mortgage lender homeowner’s insurance and property taxes every month. This payment is combined with the mortgage principal and interest so that the person only makes a single payment to the lender. A mortgage statement would help you claim and principal payments you are supposed to make since it breaks down the expenses. However, it does not specify the amount of charge allocated for insurance and the property tax. If you want to know the property taxes, go through the annual assessment statement’s tax returns.
Always remember that anything resulting in tax benefits automatically causes an increment in the net income. And the high the net income, the higher the income to pay child support or rather, the less need for child support. Most of the itemized deductions apart from the health insurance premiums, which are discounted from the net disposable income, other deductions are included as available income for child support. Meaning, if you owe child support, you will end up paying more if you own a house.
Union Dues
Unions dues are discounted from the net disposable income like the health insurance premiums. In simpler terms, money that is given to union dues is not used in child support calculations.
Mandatory Retirement
These retirement contributions are discounted from the net disposable income. Meaning, money accorded for mandatory retirement contributions is not used in the calculations of child support. If you have compulsory retirement contributions, it is crucial to establish if the retirement contributions cove for social security taxes or state disability. Unless you are paying taxes, you should not be supposed to get tax deductions. Going through your pay stubs carefully is crucial to calculate the available income for support accurately.
Child Support Paid for more Relationships.
The California law permits the court-ordered child support to be discounted from the disposable net income, although child support is not a deductible tax. A judge may also contemplate voluntary child support, but it should not outdo child support guidelines. Always confirm the actual amount of child support that another child gets.
Dependency Exemptions/ Tax Filing Status
According to many people, filing tax as single has no benefits than filing tax as “married filing jointly” or “filing head of household.”The various reasons behind that are because it affects a person's:
- Deductions
- Tax bracket and
- Net income
So, how you file your taxes impact the child support calculations. In the same way, dependency exemptions are calculated later because they increase net income. There is a myth that most people believe that your paycheck stubs or your W-4 will dictate your tax filing status. What makes the difference is how you file your taxes, for both the number of claims or dependant and tax filing status.
Expenses Included in the Monthly Child Support Calculation
While determining child support, the court looks into the following:
- Back payments
- Health insurance
- Interest on back payments
- Monetary support (for example, shelter, clothing, and food)
Monetary support also includes primary education, housing, and other essential needs for the child. Additional expenses that the parents can agree to have in the child support include:
- Unpaid medical bills
- Childcare
- Extracurricular activities ( for example, field trips, sports, lessons)
Find a Family Law Attorney Near Me
Calculating child support is an explicit method that requires your complete understanding of what is contemplated as income available for support and what is not. It is essential to get help from an experienced attorney since a single mistake can cost you a massive amount of money. Calculating child support can also cause emotional distress since it mainly follows a divorce or separation; at the San Diego Family Law Attorney, we keep this in mind while handling your case. We offer support and guidance in every step, and we keep all our client’s details private. Contact us today at 619-610-7425 for a free consultation.
