Tag Archive for: basic child support

Calculating Child Support

Child support in Pennsylvania is based on statewide guidelines established by the Pennsylvania Supreme Court. The guidelines are intended to ensure that similarly situated parties are treated similarly. Accordingly, all parties with a combined monthly income of $5000 per month with 3 kids would arguably have the same support obligation based on the guideline amounts. There is a presumption, albeit rebuttable, that the amount of support indicated by the guidelines is the appropriate amount. The guidelines are based on an “Income Shares Model” with the designated obligation being subsequently shared by the parties based on percentage of custody time as well as percentage of income.

The amount of support reflected in the guidelines is meant to provide for average expenditures for food, housing, transportation and other necessary miscellaneous items on behalf of the children. The guidelines make financial support of children a top priority. Accordingly, outside of the basic needs of the party providing support, the child’s needs in terms of support come first. Pennsylvania does however recognize a self-support reserve based on the federal poverty guidelines to ensure that a party is left with a certain amount per month to support themselves.

The first key step in calculating child support is determining the gross income of the parents. The list of what will be considered income for purposes of a support calculation is expansive. Sources of income include wages, salaries, bonuses, net income from businesses, interest, rent, royalties, dividends, all forms of retirement, income from interest in estate or trust, social security disability or retirement benefits, workers’ compensation and unemployment compensation. Alimony may be considered after the court examines the whether the alimony is intended for general support. Lump sum awards are also income and can be averaged over a certain period of time to identify how it translates into monthly income. Examples would include lottery winnings, income tax refunds, settlements, awards or verdicts and insurance compensation.

Net income will be used for purposes of the calculations. To determine net income, the rules provide that only taxes, mandatory union dues, and alimony paid to the other party be deducted. In a scenario where either party is unemployed or underemployed, an earning capacity may be imputed based on prior work history, education level, particular skill set or experience. Verification by a physician is required to prove that a party is physically incapable of working such that they should not be imputed any income.

The party having custody majority of the time is identified as the obligee or the party receiving the support. The party paying support is referred to as the obligor. In a shared custody situation there may still be a support order to be paid by the party with a higher income depending on the discrepancy in the parties’ incomes. The rules for arriving at the appropriate support award differ for low income as well as high (over $30,000/month combined income) income cases.

Adjustments may be made to the basic support obligation depending on additional expenses of the children. Health insurance premiums and child care expenses are routinely addressed as part of the support award and allocated between the parties based on percentage of income. Examples of other expenditures which may be considered include private school tuition, summer camp, and other special needs. An adjustment may also be appropriate if there are other children to support and the total support obligation for all children exceeds fifty percent (50%) of the obligor’s income.

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NJ Child Support

Child support in New Jersey is determined using the state’s child support guidelines. A worksheet evidencing the calculations to arrive at the child support order should be completed in every case. Primary considerations include the income of the parties and the custody arrangements. As it relates to the custody arrangements, there are different worksheets for use: sole parenting or shared parenting. The sole parenting worksheet is to be utilized when one parent has all the time or greater than 78% of the overnights. The shared parenting worksheet is appropriate if the alternate parent has the equivalent of at least two overnights per week under the regular schedule.

The other primary consideration is income. For purposes of a support calculation, income includes all earned or unearned income including, but not limited to, salary/wages, tips, commissions, interest/dividends, rent received, bonuses, alimony payments, pension or retirement distributions, lawsuit settlements, worker’s compensation, unemployment benefits, severance pay, gambling winnings. For self-employed individuals income consists of the gross receipts of the business minus necessary business expenses. What may be acceptable as an expense as far as filing taxes with the IRS is not necessarily an expense that would be deducted in a support calculation.

Accurate income information should be disclosed as part of the Case Information Statement submitted in virtually every family court action. Verification of the income information provided should be attached. Examples include tax returns, W-2 statements, pay stubs, profit/loss statements, etc. Taxes, prior child support orders, mandatory union dues should be subtracted from the gross taxable income and combined with any gross non-taxable income to determine the amount of income available for support. Certain benefits for the children must also be accounted for in determining income such as derivative benefits (e.g. Social Security Disability).

The basic child support award is arrived at by looking at the total number of children and the combined net income of the parents. Once the basic support award is identified, adjustments can be made for other regularly occurring expenses such as child care costs, health insurance costs, and other recurring expenses. The final figure is then broken down based on each parent’s percentage share of the combined income also taking into consideration the parenting time.

In low income cases, the final figure may still be adjusted to ensure the party owing support has an appropriate self-support reserve.

Child support is modifiable as circumstances change. For example, any substantial change in income or overnight custody time should be examined to see if a change in support is warranted. New Jersey builds in a routine cost-of-living adjustment for all support orders. Methods of payment can include direct payment, direct payment through the Probation Department or wage garnishment. The Probation Department is responsible for enforcement of all support orders.

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New Support Guidelines

Several changes to the state-wide support guidelines will take place in August 2013. First and foremost, the basic child support schedule will be updated to reflect newer economic data. The basic child support schedule is a table that references the combined monthly net income of the parents and the number of children to determine the appropriate support award. There is a presumption that the amount of support indicated by the support schedule is the correct amount. In addition to updating the entire support schedule, the Self-Support Reserve has also increased from $867 a month to $931 a month. This amount reflects the 2012 poverty level for one person. The self-support reserve is the minimum amount of income that should be retained by the party paying support to ensure they can support themselves and to provide an incentive to continue working.

Another change set to take place in August relates to the calculation of net income. Generally, the rules provide for a calculation including the net income of both parents, however, Rule 1910.16-2 will soon provide that two calculations be done in low-income cases. First, a calculation should be done using only the income of the party that will be paying support. Then, a second standard calculation should be done utilizing the income of both parties. The party owing support would be responsible to pay the lower amount of the two calculations. This revised rule is meant to address issues where the party owing support is low-income but the party to receive support has significantly greater income.

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