Who should get the deductions for the children for taxes?

The rule is fairly simple: the person who has the children more than 50% of the time gets to claim the children on taxes and then qualifies for head of household status.  You cannot change the head of household status by agreement as this is a firm rule.  You can change who claims the dependents by agreement and the delivery of the official IRS form.  See: IRS link for Releasing Dependency

This is one of the most magical areas of the law where parties can actually “create money” by exchanging dependents in certain situations.  This is usually done by the low wage earner giving the high wage earner one or more of the deductions.  This does increase the amount of child support being paid, but it also provides tax savings for the person paying.  So even though you are paying $100 extra a month, it may be that you will have tax savings of $150 a month.  You just created $250 a month that the family did not have before.

Although there are many variations on this, and it does not work for everyone, it is a great way to provide more money for everyone.

Regardless, whenever there is a child support order, I recommend that everyone adjust their withholdings on their paycheck to make sure you are receiving the all the money you are entitled to.  Money is tight and there is no reason have the government hold your money, interest free.

How do I calculate child support?

The court’s are required to use a complex mathematical formula to calculate child support.  This has been adapted by a number of different programs: i.e. Dissomaster and x spouse.  There is a free calculator available online that is used by child support services.  Child Support Calculator

Although all programs use the same formula, there can be variations between them that cause swings of sometime hundreds of dollars.

All programs function by starting with your gross monthly income and taking deductions from that income based on different factors that are allowed: State and Federal taxes; tax deductions (dependents), necessary work expenses; interest payments on mortgage and property tax payments; and mandatory (pension) retirement; health insurance.

Some deductions reduce your support – i.e. health insurance.  Other deductions increase your support – i.e. mortgage interest deduction.

Although it seems counter intuitive that a mandatory expense, like a mortgage, should increase your support payment, the reason is that the code assumes that the primary obligation is child support, before food, housing, clothing, etc.  It also calculates support after it does your deductions and when you have an mortgage interest payment, this means that you can deduct this from you can deduct this on your taxes.  When you deduct this on your taxes, you reduce the amount of tax you end up paying for the year.  When you reduce the amount of tax you pay, you have more money to pay support.  When you have more money to pay support, your support payment goes up.  If you are the person receiving support, it works the other way so that a mortgage interest payment that you make will reduce your support payment received.

What if my new spouse works?  How does that effect my support?

People are often concerned that their new spouses income will be used in considering support and don’t want to reveal this income to the court.  But really, you want your new spouses income considered.  New spouse income is only considered for a determination of what your tax bracket is, and is not considered as cash available for support.  So, if you spouses income pushes you into a higher federal tax bracket, then you will pay more in taxes to the government.  If you pay more taxes, then the you have less cash available for support.  If you have less cash available, then your support payment is reduced.  Again, if you are the payee, then this is reversed and your new spouse income will increase the support that you receive.