Child Support - "Let’s Talk $"

FOR IMMEDIATE RELEASE
Everett, Washington, United States of America (Free-Press-Release.com) March 18, 2011 --

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Child Support - "Let’s Talk $"

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OBLIGATORY DISCLAIMER/THE FINE PRINT: The reader is encouraged to explore further and perhaps to consult with counsel and only to regard the information provided here as general and you should not rely upon this information for the specifics of her/his own situation. The Washington statutes for child support are several hundred pages in Title 26 so the governing law is far more involved than the limited descriptions here. The opinions expressed herein are those of Robert N. Getz who does own a coffee cup which wryly observes that "Any town which cannot support one lawyer readily may support two." DO NOT consider this as more than general information.

Introduction to Child Support

No discussion of child support should begin without a basic understanding of the child support schedule and how the parents' income will be applied to that schedule to determine each parent's respective child support obligation as well as responsibility for all extraordinary expenses for the children. The basics:

--Child-Support Schedule (the numbers);
--Standards for Determination of Income (parents' incomes to create the numbers);

--Tax Exemptions (getting to use your children's deductions);
--Health Insurance (you can be required to provide this); and
--Self-Employment (structuring to reduce child support).

Child Support Schedule

This is the link (http://apps.leg.wa.gov/rcw/default.aspx?cite=26.19.020) to the Washington child support schedule (RCW 26.19.020). What the schedule attempts to do is recognize the difference in the cost to support a six-year-old and a 16-year-old both as a single child family, a four child family or more. If both parents only have income based upon working for someone (individual, partnership, corporation, etc.) which is shown in total on a W-2 each year and on monthly pay stubs child support should be easy to calculate. Stop there; nothing is ever as easy, simple or straightforward as it seems. Early on in their legal careers all lawyers learn the expression "The devil is in the details." Exceptions are the rule.

Standards for Determination of Income

As soon as you get to the website (http://apps.leg.wa.gov/rcw/default.aspx?cite=26.19.071) for the statute (RCW 26.19.071) you will appreciate that there is nothing straightforward about calculating child support. So what are "contract related benefits"? Does that include a company car? What if there is no employment contract and employment is "at will"? It should begin to become clear, especially as deductions are considered for retirements, 401(k) or IRA, union dues (does that include mandatory vacation pay deductions?) and related expenses such as uniforms that there is much room for disagreement and "tinkering" with what becomes net income. Social Security and/or other disability payments are to be included as income, but look at what RCW 26.18.190 provides by a different provision of the RCW at http://apps.leg.wa.gov/rcw/default.aspx?cite=26.18.190 which requires that the parent who is the reason for Social Security Disability Income (SSDI) or similar sorts of payments, from a variety of other sources, must be given full credit for all of those payments. Often, if there is an excess payment beyond basic child support giving full credit may mean that the providing parent’s share of medical payments for a child is covered to the extent of the full amount of the excess payment. Deductions for normal business expenses for self-employed persons are a particularly tricky area which can be used to great advantage by the self-employed parent and prove to be very frustrating to the other parent. Further brief observations on this topic are noted below.

Tax Exemption

This seems straightforward; however, most orders of child support, especially if drafted by an attorney, include a ‘current in child support’ provision. Such provisions typically require that a parent seeking to claim a tax exemption(s) must be current in child support obligations for the year when he/she is seeking to claim the exemption(s). Since there is a child credit in excess of $1000 the ability to claim the exemption has a substantial value. The IRS has requirements for providing support and the question becomes whether or not support is current and does current support include payments for health care expenses, special expenses or even daycare? What about when one parent saves six months or more in expenses and then presents them on December 25 and requests payment?

Health Insurance
Whether insurance is available to a parent is determined generally, by a 25% rule which may be summarized as: If your cost to provide health insurance is not more than 25% of your basic support obligation, then you will be required to provide such insurance. Potentially, this can result in both parents providing health insurance and, depending upon the quality of the health insurance available, may lead to paying more for insurance than likely will be recovered from insurance claims.

Self-Employment

First, we must distinguish between whether or not the self-employed parent has made the business into a corporation or LLC. If not, then the parent will be required to justify expenses which are question. Be assured that what the IRS will allow to be deducted will not necessarily be permitted for child support purposes. Disfavored deductions for child support purposes include business use of a home and depreciation. If the business is conducted as a corporation or a LLC then there is a separate taxpayer, that entity, and there are a variety of opportunities and a substantial ability to reduce income through business expenses for such things as the business’ payments for cell phones, computers, ISP, company cars, health insurance, tools, shop space rents and a variety of other normally accepted business expenses. These really are the tip of the iceberg and many of expenses may be incurred to reduce the earnings which the business owning parent shows for child support calculations.

SUMMARY
There are a multitude of considerations in arriving at calculations of child support. This article was not intended to be exhaustive and only informative to a limited extent on the subjects addressed; it is not exhaustive at all. My hope is that the reader will consider the vast possibilities in the child support universe. Please look for periodic additional posts to this child support .

More information can be found online at http://www.rgetzlaw.com

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