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2013 Child Support Guidelines Preview Part 3: Whose Income is It, Anyway?

Wednesday, July 24, 2013

Since their 1987 inception, our Child Support Guidelines (CSG) scheme has confined its presumed “mandatory minimum” child support formula to family income falling within a fixed threshold. Initially, the annualized income limit was $75,000.00. Since 2009, it has been $250,000.00. The 2013 CSG do not change the threshold amount; but they do clarify a financially meaningful ambiguity: in two earner high-income families whose income comprises the first $250,000.00 and who’s the “excess”?

Historically, there were two common approaches: count the payor’s income first or apportion the parties’ joint income based on their percentage contribution to the whole income stream. Each created a different child support sum and its own version of excess income (income not absorbed by the presumed minimum child support but still available for alimony and/or additional child support with discretion unbridled by formula, and/or ancillary expense obligations such as medical, extra-curricular and education costs).

Here is an illustration, based on the following assumed facts: payor income of $300,000.00; and payee income of $50,000.00; and one child. For simplicity, without permitted medical insurance or childcare adjustments, the results are:

1. Count the payor’s income first:

Child support = $40,144.00 per year
Excess income = $50,000.00 for and each parent
Likely alimony = none.

2. Allocate the parties’ incomes:

Child support = $34,944.00 per year
Excess income = $85,000.00 payor; $15,000.00 payee
Likely alimony = $22,750.00

These two very different results illustrate a potential for inconsistent outcomes that are anathema to CSG, so the 2013 version settles the question: option 2 is now the rule. This resolution is conceptually consistent with the underlying “income shares” theory of CSG. It also has an economic effect on the parties. In this case, if the payee’s combined effective tax rate is 18% (which it would be assuming no other taxable income or itemized deductions), the net after tax yield is $18,655.00: a result of $53,599.00 of combined alimony and child support vs. $40,144.00 of child support alone.

So, what appears at first blush to be reduced child support is actually a 34 per cent increase in net-after tax total support. This increase might be tempered by shifting more ancillary child costs to the payee, but the differing outcomes are nonetheless stark. We wonder if this was an intentional effort to increase periodic family support payments in high-income cases (despite that many child support payments under 2013 CSG will be lower), or simply an effort to promote uniformity.


  1. Assuming application of CSG before the 2012 alimony law, and not the reverse, as is now permitted under 2013 CSG. See our last blog entry.
  2. The payor’s income is 86% (300/350) of the family’s income, so $215,000.00 ($250,000.00 x .86) of the payor’s income applies against the threshold; and $35,000.00 ($250,000.00 x .14), of the payee’s income comprises the rest.
  3. Using the .325 mid-point of the “general” alimony range.



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