Most parents going through a separation or divorce, whether they’re in mediation, Collaborative Law or in a court-based litigation process, are aware that some form of child support payments will be warranted in their case if they have children under 21. But the details of exactly what amount of child support to expect can get confusing.
The purpose of this series of blog posts is to guide you through the basics of calculating child support in New York State and to leave you feeling comfortable and confident in your understanding of New York child support law. In my last post, I briefly defined child support and emphasized that parents do not have to go to court to resolve a child support issue. They can come up with their own agreement together. In this post and the one that follows, I’ll talk about the basic child support obligation-what it is and how a court might calculate it.
The Basic Child Support Obligation
What is the basic child support obligation?
The basic child support obligation is the initial part of a child support award. It ensures that both parents are contributing to their child’s care and support. The basic child support obligation is intended to cover expenses like food, clothing and shelter for the child.
How does a court calculate the basic child support obligation?
A court’s calculation of the basic child support obligation is a function of two things, primarily: the parents’ income and the number of children in the family.
Parental income is the single most influential factor the court uses in determining the basic child support obligation, so let’s get started understanding it.
Combined Parental Income & Parental Income Ratios
To determine child support, a court must calculate: (i) the combined parental income and (ii) the proportion or ratio of each parent’s income to the combined parental income.
Calculating combined parental income is pretty straightforward. You just add each parent’s income. So, if Mom’s income is $200k, and Dad’s is $100k, the combined parental income is $300k.
Using the numbers above, you can calculate each parent’s portion of combined parental income. In this example, Mom’s portion of the combined total is 67% (i.e., $200k of $300k), and Dad’s portion is 33% (i.e., $100k of $300k).
The above calculations are simple, but knowing what counts as parental “income” for child support purposes is more complex.
What counts as parental income for child support purposes?
When calculating parental income, we’re working with a form of adjusted gross income. The biggest mistake I’ve seen clients make in this area is to assume that child support is calculated from their net or after-tax (i.e., take-home) income. Not so. Instead, a court looks at each parent’s gross income (as defined by New York statute) and subtracts allowable deductions (also defined by New York statute) to arrive at an adjusted gross income for each parent.
(Gross Income) – (Allowable Deductions) = Adjusted Gross Income. (The child support law refers to this amount simply as “income.”)
What counts as gross income?
The baseline for determining a parent’s gross income is what that parent reported on their most recent tax return (presuming correct reporting). To the extent not included on that tax return, the law highlights additional categories of gross income-for example, investment income, unemployment benefits and pension benefits. At the court’s discretion, gross income may also include more abstract concepts like employment perks that cover personal expenses (e.g., reimbursement for meals), and/or sums of money or services a parent receives from relatives or friends. For a complete list of sources of gross income, see Domestic Relations Law § 240 (1-b).
Here’s an example: Mom works at a large law firm and receives a bonus in addition to her base salary. When she works late or over the weekends, the firm covers the cost of her meals. Mom also owns a condo in Stowe that she rents out throughout the year. Dad works as a graphic designer and dabbles on e*Trade. Dad’s parents contribute about $100,000 per year to help the family cover the cost of private school tuition for their children.
In the above example, both Mom’s base salary and her bonus would be included in her gross income tally, as would the income she clears from her Stowe rental (as reported on her taxes). Dad’s salary as a graphic designer and his investment income (as reported on his taxes) would be included in his gross income tally.
It would be up to the judge’s discretion whether to assign a value to the meals Mom gets covered through her work (to the extent they reduce expenditures she otherwise would have had) or to the contributions Dad has historically received from his parents. Given the significance of Dad’s parents’ financial contribution to the family, it is likely that a judge would impute at least some of that amount to Dad as income. If Mom only has the occasional meal covered by her employer, the value of that particular perk is not terribly high, and the court may not deem it worthwhile to include as income. In contrast, if Mom’s employer paid for her car each month, that might be another story….
What counts as an allowable deduction?
New York child support law describes in detail the kinds of deductions that are permitted in calculating parental income. A few of the key deductions to be aware of are: (i) FICA (Social Security and Medicare) and NYC/Yonkers taxes paid; (ii) child support being paid for another child; (iii) alimony being paid to a former spouse; and (iv) certain unreimbursed business expenses. A parent should consult with an attorney who specializes in New York family law to learn what other deductions, if any, he or she might be entitled to.
- In calculating the basic child support obligation, parental income is a key component. Two especially important numbers are:
- the combined parental income; and
- the proportion/ratio of each parent’s income to the combined parental income.
- Combined Parental Income = one parent’s income + other parent’s income.
- Parent’s Income = (parent’s gross/pre-tax income) – (allowable deductions).
- Parent’s Gross Income = (all income parent reported on tax return) + (additional categories created by law).
- Allowable Deductions = (FICA) + (child support being paid) + (alimony being paid to a former spouse) + (additional categories created by law).
Determining what counts as income and allowable deductions for child support purposes is the most difficult part of calculating the basic child support obligation. Once those numbers are clear, the rest of the calculation is simple arithmetic.