781.708.4445

wmlevine@levinedisputeresolution.com

Divorce Mediation Blog

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.



Get e-mail notifications of new blog posts! Enter email address below.:



Delivered by FeedBurner

other articles


recent posts


tags

Divorce COLA disputes The Seven Sins of Alimony Massachusetts Lawyers Weekly Divorce Agreements Massachusetts alimony and child support mediators Levine Dispute Resolution Center LLC Boston Alimony Reform Act fraud self-adjusting alimony divorce mediator divorce litigation family law arbitrators family law arbitrator divorce arbitrators lawyer-attended mediation divorce mediations support orders General term alimony mediation family support alimony law divorce and family law mediators mediations medical benefits divorce arbitrator Levine Dispute Resolutions pre-ARA alimony alimony orders Baseball Defense of Marriage Act divorce arbitration Obamacare special master divorced lawyers med-arb Self-adjusting alimony orders Massachusetts Alimony Reform Act litigation IRC §2704 alimony Massachusetts alimony mediator family law mediation Uniform Arbitration Act Levine Dispute Resolution Center conciliation private dispute resolution family law arbitrators Massachusetts divorce mediators divorce lawyers lawyer high-risk methodology LDRC Cohabitation alimony reform legislation divorce mediation divorce and family law divorce agreement family mediation health coverage Massachusetts Baseball Players SJC Family Law Arbitration DOMA med/arb Same Sex Marriage Matrimonial Arbitration arbitration Chouteau Levine how baseball arbitration works arbitrator Act Reforming Alimony in the Commonwealth MLB labor agreement resolve disputes Major League Baseball Arbitration divorce judgment family and probate law disputes Child Support Guidelines facilitated negotiations alimony statute Levine Dispute Resolution health insurance child support dispute resolution Massachusetts divorce lawyers traditional negotiations separation Massachusetts lawyers Baseball Arbitration annulment divorce mediators divorce process rehabilitative alimony