Being in the midst of a relationship separation can be stressful and even more so if children are involved. You may be aware of having to pay child support payments but are confused as to how it is calculate. There are two main models for determining the payments amount.
First is the Income shares model. The court bases the payment amount on the income of both parents and how many children they have. The court will determine the expected cost of raising a child and that cost will be split between both parents. It does not matter who is the custodial or non custodial parent. The payment split is based on gross income each month. If the custodial parent earns a higher income then they will pay a higher percentage of the expected cost of raising the child or vice versa if the non custodial parents income is higher.
Second is the Percentage of Income model. The court will determine a specific percentage per child that the non custodial parent will pay. This is a fixed percentage and depending on which state you live in may fluctuate if the non custodial parents income fluctuates also. In most states the the dedicated percentage for child support is 25%. So a quarter of their monthly salary will be paid by the non custodial parent.
It is important to remember that child support payments are only intended to cover basic living expenses deemed necessary for the child’s upbringing. This can include food, school fees and medical costs. an unreasonable expense would be if the custodial parent wanted to take their child / children on a lavish holiday. The non custodial parent would not be expected to contribute to this as it is not a basic need of the child.
Child support payments themselves are not tax deductible. And the custodial parent doesn’t have to list them as income on their returns, either. Unlike child support, alimony that is, spousal support is tax deductible to the payer, and the payee has to report it as income.
Whatever type of child support arrangement you put in place, it’s important to remember that it can help to give a child the best start in life and continues until your child reaches adulthood. It’s essential that both parents work together to agree what’s right for them and their child.