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Posted in Child Support on 29th November 2010

Child Support and Calculating the Costs

Copyright (c) 2009 Ron Lasorsa

The court views child support as the child’s right to receive financial help from their parent. And quite honestly, a parent should want to support their child to the best of their ability. However, there are situations on each end of the spectrum where the results are inequitable. For example, a parent may be working extra hours, over-time and doing everything in their power to make money because they want to stay current on their child support, yet still have enough to live. Often, the child support (which can be up to 40% of one’s net disposable income) makes it difficult or impossible for the parent to afford their own household. Or you might have a parent who does not represent their income correctly in which case a child suffers when the parent actually has the resources to help. Child support can be excessive or off-center when: (1) You have an unreasonable ex-spouse who continuously takes the other parent to court; (2) Ex-spouse lies about their income creating a skewed view of the respective parties resources; (3) Under-the table and self-employment earnings; (4) Arrearages; and (5) New family expenses. Let’s go over each scenario in detail…

Unreasonable Ex-Spouse Taking Other Parent to Court

In this situation, you have an ex who wants to go to court every time they can. The problem with child support is that ever time there is a change in income +/- in either household, that party can file a motion and go back to court. So, let’s assume father gets a raise or a bonus and mother discovers this, mother is entitled to take the father back to court. Ignoring the expense of attorneys to defend against the motion (ranging from 0.00 to 0.00, for example, the father may now experience an increase in his support as a result of his good work and efforts at his employment. Many responsible parents who support their children well view this as a form of punishment, i.e. the result of getting a work bonus or raise is being hit harder with support. It is certainly a DIS-INCENTIVE if ever I have seen one. Why work so hard if you are just going to have to pay more in support?

Ex-Spouse Lies about their Income Creating a Skewed View of Resources

Child support is determined based upon a number of factors, one of which is the parties resources. The courts will insert each parties income into a computer program and out spits an amount of support. If one spouse lies about their income, the support amount will be off. Here’s how it works if either spouse lies – If the parent RECEIVING support lies, they will receive more support than they are entitled to because they have represented that they make LESS money. Not only do they have difference between their actual income and what they stated but they also have increased support. If the parent PAYING support lies, they will pay less support when in fact they have more net disposable income which could have gone to their child. Thismay cause the supported parent to struggle and the household to go without when the supporting spouse has the resources but is too greedy to pay.

Under-the table or self-employment earnings

Under the table earnings – those which are paid in cash and without regard to payroll, state or federal income taxes, have the same impact as the example listed above. Where these earnings are even more challenging is in the ability to “show” them. Since courts rely on income to determine support, under the table or self-employment income pose a problem because they are difficult to track. Most self-employed individuals, for example take as many deductions as they can on their tax returns. This creates a slanted view of income because the goal of self-employed tax returns is to pay as little as possible to the franchise tax board and the IRS. What might be an annual income of ,000.00 now looks like ,000.00 which, when plugged into the child support software, yields a MUCH DIFFERENT RESULT. The under-the-table individuals, they may not be claiming the income at all. Since there are no tax returns or pay stubs, that party can represent income that is difficult to disprove (without a private detective following them around taking pictures of cash!!). Clearly, when a party can say that there income is just about anything, child support will be distorted.

Arrearages

A party is ordered to pay a certain amount of money. If they get behind, that amount is called “arrears.” So, let’s assume that Mother owes 0.00 per month and she is behind (4) months or 00.00. Father takes her to court to pay the back arrears. Some courts will assess interest on the arrears as high as 10%. That would make the arrearages actually 00.00. The mother needs to start paying this back to avoid getting too far behind. Additionally, the court does not want to spread it out over too long a period of time. Let’s assume the court orders mother to pay back arrearages at the rate of 0.00 per month for the next (10) months. Therefore, instead of paying 0.00 per month – she now pays 0.00 per month plus any “additional” support such as day care, health premiums, etc. which are completely permissible court—ordered add-ons. This results in mother now paying a greater percentage of her net disposable income to support, yet we must think of father. For (4) months, he supported the child 100% without any aid from mother. So, there is a valid argument for each parent as you can see.

New family expenses

These expenses are perhaps the most difficult to work with . What occurs here is that one or both parties have moved-on, remarried and had more children. That new family creates additional expenses to the family which then pull from the supported child. Most courts call these new expenses hardship deductions. For example, father re-marries and his new wife has twins. Now, the father is supporting his (3) children from his first marriage, but he alsohas a new family that require his support as well. Let’s assume his new wife earns no income and stays at home carrying for the new babies which is often the case. If the Dad was paying 00.00 per month for his three children – and only makes 00.00 per month, this leaves 00.00 to care for a family of (4) which may be difficult. The court will apply a hardship deduction for the twins which, believe it or not, reduces the support paid to the (3) children from this first marriage. So now, the supported parent receives 0.00 because Dad decided to have more children. While the result seems very unfair to the supported parent whose expenses remain the same, the supporting parent’s expenses have now increased and he now must support (5) children vs. (3). It is the classic blood and turnip argument in play.

While child support is clearly the child’s right to receive financial support from their parents, the court depends on the parents to be honest. There are some things (as described above) over which the court has no control, such as cash earnings, self-employment income and the fact that support is reduced when more children come into the family. If parents focus their attention on providing the best financial environment for their children and being honest, the less the court has to be involved and the less expensive litigation can be.

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