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These child support basics will benefit you and your children

Rosemary Frank Divorce Financial Expert, TN State Supreme Court Listed, Rule 31 Family Mediator Rosemary Frank, MBA, CDFA, CFDP, CFDS
These child support basics will benefit you and your children

The guidelines governing child support are established at the state level and differ from state to state. Oftentimes, the issue of child support in a divorce is very contentious. But it doesn’t have to be that way. Knowing some child support basics will benefit your children, you and even your ex-spouse.


Do

Do understand that both parents contribute

Child support is about the child’s rights to have what s/he needs to grow and develop according to a minimum social standard. Both parents are expected to contribute proportionately according to their means. When one parent has greater income than the other, they are expected to contribute to a greater portion of the child(ren)’s needs. Therefore, the higher income parent will pay the lower income parent the difference in proportionate shares needed for the children.

In states that calculate child support as a percentage of income, such as 15%, then each parent would contribute 15% of their respective incomes toward support of the child(ren).

Child support obligations are calculated differently in an Income-Shares state. For instance, if one parent makes twice as much as the other parent, the higher income earner represents two-thirds of the combined parental income and the lower earner represents one-third of the combined parental income. Two-thirds vs. one-third.

Theoretically, if a child has $3,000 in needs per month, the higher income parent would contribute two-thirds of those needs, or $2,000, and the lower income parent would contribute one-third of those needs, or $1,000.

In reality, these contributions are offset by conditions of the parenting plan. Some such conditions may be: Time spent with the child(ren) by each parent and direct support provided during that time; Expenses paid on behalf of the child(ren), such as health insurance premiums or medical co-pays; work related child care expenses.

It can get a bit complicated, but the important thing to remember is that both parents continue to actively contribute to the support of the child(ren), similar to what they did during the marriage.

Do follow all the rules when determining

Although child support guidelines are quite rigid regarding calculations, there are rules to follow when determining the numbers that go into the calculations. For instance, income of one or both parents is not always so simple to determine. There is often “regular” income and “irregular” income, such as bonuses paid by employers, or non-salary withdrawals taken from a business, or investment income from time to time.

All of these sources of income, which may not be “regular” income do contribute to a standard of living that has been established for the family, particularly the children, during the marriage. State laws differ on some details of what is to be considered income. Your attorney can provide guidance on the law; Your divorce financial expert can assist with the calculations.

Do pay in full and on time

If you are the parent required to pay child support, be faithful in meeting your obligation to the children. Remember those funds are not discretionary. Household bills need to be paid on time by your ex-spouse for the child(ren)’s benefit. The size of your ex-spouse’s home has been determined by the space needed for the child(ren), and the mortgage or rent needs to be paid. The child(ren) are using utilities beyond that used by your ex-spouse and the utilities need to be paid.

In addition to the basics, children keep growing and, unlike adults, need new clothes and shoes regularly. To not provide the basics, as needed, not only leaves the child(ren) without what they need, but also potentially inflicts emotional damage due to shame and embarrassment from the peer pressure they experience.

Do use it for the children

If you are the parent who receives child support, take care to use all such funds for the benefit of the child(ren). There is just no alternative. This is their money, and to do otherwise would be to steal from your children.

It may be beneficial to keep records of household and personal expenses to substantiate the use of child support funds as part of your overall budgeting. This could be useful in case specific uses are ever called into question. In any event, good accounting of all funds will make you a better manager of your household finances.

Do be prepared for changes when circumstances change

As life goes on, things will change. And so may child support obligations. Based on the above discussion, you can see that if either parent’s income changes, child support obligation changes may follow. Also if the parenting plan is altered and the child(ren)’s time is reallocated between parents, the financial obligations may shift.

Such changes are not automatic and should not be attempted on your own. Changes in child support must be ordered by the court. Therefore, it is best to follow the same procedure in making changes as was followed in the initial establishment of the obligation. Consult your attorney for legal advice and assistance. In some cases, particularly if income is in dispute, consulting a divorce financial expert may be beneficial.


Don't

Do not discuss with or in front of the children

Divorce is hard enough on children, even under the best of circumstances. It is quite common for them to think that somehow the divorce is their fault. That they could have done something to stop it. Or that they should have been more of a unifying force between you. Don’t add to this with “discussion” on how they are to be provided for, and who does or doesn’t want to pay for what. These are adult topics and adult discussions. They need to be had out of earshot of confused children.

If you want to share some of the new household financial issues with children, do it in an age-appropriate way. You might talk about eating out less to save money for something else they value, like vacation or sports, and eating more healthily at home. Talk about conserving water and electricity from an ecological perspective and go green. Offer a set amount of money available for toys and allow them to make choices in a positive way. Child support and its limitations need not be a part of this discussion, whether you are paying or receiving it.

The obvious could always be restated: Where the child(ren) used to have one home, they now have two, and two houses cost more than one, so other things may need to change a bit.

Do not use child support to bargain for child time

Child support is totally separate from child time. All children need to be supported all of the time. Children of different ages may need varying amounts of time with each parent. In the interest of doing what is best for each child, their time and preferences should not be bargained into the child support obligation.

Your child(ren) is not a commodity to be bargained for in a financial negotiation. Consider what is best for them and their care in developing a parenting plan first. Then turn to the child support guidelines to see where you land on the financial issues. This cuts both ways, for both parents.

Nor should child support payments be withheld in light of time availability with the child. As children get older and have more of their own activities, neither parent may see as much of them as they wish.

Do not ignore a problem

If you become ill, lose your job, or an unusual financial hardship develops, work it out with your attorney’s advice. Whether you are paying or receiving child support, a change in circumstance may be an occasion for the modification of court orders.

Likewise, if your living situation or work obligations change so your parenting time is limited, don’t ignore it. Being as forthright as possible will avoid acrimony between you and your ex-spouse, at the emotional expense of the child(ren). Yes, less parenting time may result in an increase in child support. But these are two separate issues and must be decided separately for the best child-centered outcomes.

Do not include child support in alimony

Agreeing to an increased alimony amount “…until Billy graduates from high school,” or in some states “…finishes college” or otherwise emancipates, is asking for future tax problems. This can easily happen when the child support guidelines do not provide for the child as both parents recognize is customary.

The higher wage earner then willingly pays a higher level of alimony for as many years as the child remains dependent. They are glad to do so, and receive the tax deduction for alimony payments. The payee is also glad to agree to the extra assistance. Both may have to deal with the IRS when that child emancipates.

Complex regulations in the Internal Revenue Code prohibit the reduction of alimony coinciding with the emancipation of a child(ren). The IRS may redefine such payments as child support, from the first payment forward, imposing taxes and penalties on funds they determine are non-tax-deductible child support rather than tax-deductible alimony.

Do not insist on claiming the child(ren)

Claiming the child(ren) as personal income tax deduction(s) is not evidence of your love. Neither is it validation of your monetary support of them. Rather, it may actually be counter-productive and, overall, more costly than if you let your ex-spouse take the deduction.

You and your ex-spouse have a “pool” of financial resources between you which ought to be maximized by financial decisions you make during the divorce. To do otherwise could deplete the “pool” and may come back to cost you both more in the end. Any deficiency one of you has may need to be made up by the other.

Actually, the amount that a taxpayer may take for the personal deduction for dependents is “phased out” for higher income individuals. Therefore, the deduction may be worth more to the other parent, thereby preserving your pooled resources. Other considerations include the availability (or not) of claiming/not claiming a child, the Child Tax Credit, Hope Credit, and the Lifetime Learning Credit.


Summary
Jumping cartoon

The most important thing to remember is that child support is about the needs of the children. They need support in a number of ways, financially for sure, but also emotionally by not being made a lightning rod between you and your ex-spouse. When you divorce your spouse, you do not divorce your children. Continue to care and provide for them as you intended on the day they were born.


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Rosemary FrankDivorce Financial Expert, TN State Supreme Court Listed, Rule 31 Family Mediator

Rosemary Frank, MBA, CDFA™ CDFP®CDFS is a financial services professional with a specialty in the finances of divorce. She advises clients who are divorcing, and their attorneys, on the long term financial impact and consequences of proposed div...

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