This posts picks directly up from Volume 2. These are less impactful entries into the input variable categories in the Child Support Dissomaster but not unimportant.
9. New Spouse Income
This one is often a complete shock to people when we start running Dissomasters in my office. New spouse income actually has a counter-intuitive impact on the support payment. The new spouse has no obligation to support your children or your ex-husband, but it does have an impact on your income. First off, when you get married to a new partner, your tax filing status changes – you get an advantage in filing MFJ v. filing Single. You also get a second exemption so you are filing MFJ 2 instead of Single 1. That increases your support payment because it makes more income available for support because you pay less income tax.
On the other hand, if your new spouse has income in addition to your income, your tax bracket changes. The more your new spouse earns, the less money you have to pay in support (or the more you receive in support).
A true story case I had in the last year had a father (my client) with a 35% timeshare of his teenage daughter. He had a small business as an Uber driver and worked part-time for one of the larger package delivery services. He earned about $3,500 per month between the two jobs. His ex-wife, who was one of the most unsavory characters I have ever come across in my entire career, was a nurse with a Master’s degree. She was partially so awful because she said such awful things to him and about him. She felt like she was the ant and he was the grasshopper (probably true), but he was a really funny guy and fun to be around, and she was one crappy sourpuss. Anyway, she managed to rope another man into her life – a former firefighter with a disability pension of around $50,000 per year (nontaxable income) who was also a nurse (she had the affair at the hospital, but my client was the bad guy…anyway, usually I get over these things but this one is obviously still bugging me). Both of them earned right around $90,000 per year.
At a 35% timeshare with his income at $42,000 per year and hers at around $90,000 per year, there would have been no child support payment (if she claimed the child exemption) or a very minimal one from the mother to the father. But when you added in new spouse income, the payment went up to around $300 per month! I argued vigorously for this guy that the Court, first, should discount the new spouse income to $0 based on the equities of the situation.
Family Code section 4057.5 sets forth that you cannot use new spouse income to set or modify support. At least not directly. Family Code section 4059, however, says you can use it, though, to determine the actual tax consequences on the parent’s responsibility.
County of Tulare v. Campbell(1996) 50 Cal.App.4th849 is a killer when it comes to arguing this issue:
“When a parent has married a wage-earning spouse with whom he or she is filing a joint tax return, accurate calculation of the parent’s actual tax liability is not possible unless the couple’s combined gross income is considered. The new spouse’s income is merely included in the calculation of the parent’s actual federal and state liability; while that inclusion may, depending on the circumstances, affect the “bottom-line” child support amount, we do not perceive this indirect effect as being at odds with section 4057.5. Rather we interpret section 4057.5 as prohibiting direct consideration of a new spouse’s income in determining proper support, absent extraordinary circumstances. Thus, the trial court is not authorized to raise or lower child support because a parent has remarried. However, this does not preclude determination of a parent’s actual tax liability based on the combined gross income of the parent and his or her new spouse. This tax liability may then be taken into account in order to accurately determine the parent’s real net disposable income.”
This is a true bullet for anyone dealing with a person who is in the counter-intuitive situation of remarrying wealthy and finding themselves entitled to more child support. Back to my case, I argued that the consideration of new spouse income in this instance was unfair (but lawyers hate to argue fairness when law dictates a different outcome). How could it be that a father with 35% timeshare on $42,000 per year was paying child support into a home where the gross income was $230,000 per year? The caselaw doesn’t help you out in this situation because the legislature has built a basic inequity into the Family Code in the Family Code section 4057.5 and 4059 distinction. The parent receives the benefit of the shield provided by 4057.5 but gains the advantages of having the new tax status accounted for from 4059. The Courts have not liked this. The Court in In re Marriage of Romero (2002) 122 Cal. Rptr 2d 220 balked at the inequity of the situation in which Husband’s new wife had a great job while Wife’s fortunes completely failed. He was able to get his support reduced in the meantime.
In my case, I was forced to argue equity and unfairness. I said loudly that it was unfair just at the most basic level that this dad who had joint physical custody of his teenage daughter – who needed a bedroom, clothes, sports team fees, high school activities, etc. – on a slightly better than subsistence living in Santa Barbara County was going to write a check each month into a household with four times as much income.
I resorted to equity. Equity (fairness) is always available in any case, but judges prefer law (cases and statutes). You can ask for a deviation from guideline support as the Court in County of Lake v. Antoni(1993) 18 Cal.App.4th1102 authorized a deviation from the guideline support calculations if the circumstances warrant it, but although everyone wants to argue that, there are very limited circumstances for it. The Antoni court upheld the consideration based on alarge consumer debt and additional children the father was supporting, but it also noted that his child support payment tripled rather than quadrupled as the Dissomaster program said it should.
In any event, we lost that issue. Well, we did get a reduction in support from the $556 per month my client was paying to around $230 per month and actually pulled a little off the guideline support calculation with our equity argument. My client had a new baby on the way and the court factored that into the calculation under hardships (below) but overall I was disappointed to lose the legal argument on that one.
10. Adjustments to Income
The adjustments to income slot is for deductible expenses from the tax return. These do not reduce income available for support, they increase it because of the advantaged tax treatment. Almost no court uses it. If you are slick and can figure out how to stick it into your ex’s Dissomaster, it might save you some money in support.
11. Child Support Paid – Other Relationship
This is a guideline deduction but there is no positive or negative tax treatment for the payment of child support.
12. Spousal Support Paid – Other Relationship
This is a guideline deduction but it is a tax adjustment to income. This will start to phase out with the new tax rules for 2019.
13. Health Insurance
This is both a guideline deduction and an itemized tax deduction. There are options available in Dissomaster to make sure you get the correct treatment. Self-employeds enter the information into the “paid by party” column while wage earners enter it into the “wage deduction” column. There is a column for pre-tax contribution as well. Make sure you get this right on your spouse’s Dissomaster but for your own, put the number in the least tax advantaged category on the Dissomaster. Lazy judges and lawyers will almost assuredly not double check you and it might save you $50 per month.
14. Itemized Deductions
This is an important one, but again, counter-intuitively so. The greater your itemized deductions the higher your support obligation (or the lower your need), because you have more income available for support. Generally speaking, the major itemized deduction is for mortgage interest, property taxes and insurance. However, you can be industrious and search through the tax returns looking for additional itemized deductions to increase the support obligation if that is what you are trying to do. My experience is that most lawyers (and almost all judges and/or parties) have no idea how to work their way through the more complex areas of Dissomaster calculation. So, if you are trying to reduce support, don’t spend much time talking about what you know about this category for your own entries, but search for all of the itemized deductions your spouse has taken, or vice-versa.
15. Mandatory Retirement
For PERS and STRS recipients in particular, you want to change the tax setting to take away the FICA and social security tax settings, but enter your mandatory retirement contribution. If it is qualified Dissomaster treats it as a tax benefit to you – an Adjustment to Income – if it is not qualified it takes away the benefit to you but also treats it as not available for support. You should also check the categories for taxes along the top of the Dissomaster program if you have mandatory retirement. Many mandatory retirement payors who work for the State or Federal government do not pay FICA or Social Security. This tends to make you pay more when you get the benefit and pay less when your spouse has it. Many many lawyers are either too lazy to check these boxes or they do it on purpose. Make sure you check the correct boxes for your spouse and I’ll leave it up to you whether you want to offer them up to your spouse if you are the one who doesn’t pay FICA or Social Security or California short term disability.
16. Hardship Deductions
There are two types of hardship deductions – 1) direct reductions of income available for support due to statutory expenses like extraordinary medical expenses and 2) there is a calculation for “hardship children.”
For direct statutory expenses, you add these into the calculation directly as a dollar amount. These might be catastrophic medical care or something along those lines. I have a very wealthy client who is more or less bedridden. We are fighting over whether the $15,000 monthly payment for her around the clock health attendants counts as catastrophic medical needs for purposes of this calculation. Because the Husband earns on the order of $800,000 per year, it generates a difference of a spousal support payment of $36,000 per month if it is not and $48,000 per month if it is.
The hardship deduction for “hardship children” (which sounds like a sad movie to me, but that’s just me) is calculated in such a way as to match the Presumed Child Support (plus basic add-ons) on a per child basis. The hardship for each “hardship child” is set equal to the presumed child support order. It can add or reduce child support obligations depending on which side of the line it falls. Hardship children should only be available for support when they are the children of your ex-spouse and not when they are stepchildren, siblings or elderly parents.
Generally speaking, a hardship child is one-half if the other parent is involved in the matter. I had a case recently that frustrated me to no end because the Judge wanted to give the mother a full hardship for a child whose father was not seeing her, but who was local and could have been made to pay more support. They had an agreement that the father did not have to pay support (or very little) if he would just leave them alone (not my favorite order but supposedly he was a pretty bad dude so maybe it was better that way). My point to the Court was that my client (the newly divorcing stepfather) should not have to support the child because the Mother refused to go after the biological father for more support. Our judge told us that he was more interested in what was actually happening than speculation on what could happen, so he gave her the full hardship (it changed support $75 per month on a $3,300 per month support payment because my client was a high-earner, but I think the Judge got that one wrong).
17. Other Guideline Deductions
The amounts you enter as other discretionary deductions reduces income available for support dollar-for-dollar. In addition to actual discretionary deductions, you can use this line to adjust guideline nets due to Dissomaster program limitations. In other words, this is a basic catch all category.
18. Child Support Add-Ons
There are certain statutory add-ons – some are mandatory like child care costs so a parent can work and unreimbursed health insurance and some are discretionary like payments for educational or extra-curricular activities. These can be added to the support calculation (payable directly to the parent incurring the costs) or they can be payable directly to the provider.
Child care costs are a sneaker because they might seem like the parent already gets a lot of support and should have to pay child care costs on their own. The theory is that if they are not working, they shouldn’t have child care costs and if they are working and need child care to be able to work, the supporting party is actually getting a benefit from that in the form of reduced support and so should be liable for half the cost of the child care.
Typically I suggest that clients do not agree to add these on to the child support calculation but agree to pay the provider directly. Why? Kids don’t always go to child care every day they are supposed to and the costs fluctuate. If you have an order to pay $350 per month and the child only gets $500 worth of daycare, you are overpaying. The same is true with even recurring unreimbursed medical costs.
19. Tax Settings
I already mentioned it above but you can modify the tax setting for anyone who does not pay all employment taxes – meaning FICA, social security, Medicare, etc. Teachers, firefighters, law enforcement, public servants, some nurses, correctional officers, anyone who works for a public entity likely doesn’t pay one or all of these. Make sure you go on the special screen and uncheck the boxes. Or make sure you don’t. A client that I inherited from another lawyer came into the office this evening. She is a high school teacher who makes a little over $100,000 per year. She does not pay FICA or Medicare. Lazy lawyering by two lawyers and a completely uninterested Judge led to them failing to uncheck the FICA and Medicare boxes but still give her credit for her mandatory retirement contributions. This led to an under-award of child support by over $400 per month and led to a “no payment” of spousal support that should have been around $150 per month. All in all, failing to check those boxes cost the Husband around $550 per month. As we talked about the $187 per month payment she was actually ordered to make, we discussed the thought of just leaving the order alone (as mad as she was to be paying it), uncorrected. They, predictably, made other mistakes as well – they misstated her income, under calculated her health insurance payment and failed to include her union dues, all things that would have reduced her support burden, but none of them were as serious as the issue of the failure to uncheck the FICA and Medicare boxes. Those are employment taxes that she does not pay and thus represent income available for support that no one calculated.
These are the basic input variables for the Dissomaster program in calculating child support. As I mentioned earlier, most lawyers, and most judges, ignore 80% of these input variables. If you are handling your divorce or child custody matter on your own, you will want to review each of the inputs to see if there are helpful additions you can make. Ordinarily, anything that will save you money in tax obligations or anything that you are required to pay by law or anything that generally means more net spendable or discretionary income for you means that you will pay a higher support payment (or receive a lower support payment), while anything the tends to increase the other parent’s net spendable income or reduce their tax obligation will result in a reduction in support you pay.
As I have said several times now, and it bears repeating here, the law wants, I believe, and common morality dictates that you pay child support for your children – whether you have them 50% of the time or they are really upset with you and you do not see them at all. In one of my current cases, the two teenage boys are very angry with their father – I’m no psychologist but I think it’s because he’s had four live-in girlfriends in the 3 years since their parents divorced and it’s clear that he has not helped their mom financially. The two boys, despite best efforts, will not visit their father. In fact, because I represent their mother who told me that she really did want the boys to visit their father, by any means necessary, opposing counsel and I pooled our money and offered $100 apiece, in cash, if the boys would go and spend a weekend with their dad and then come back and report to us how it went (they both went for the weekend, but only the younger son would come back and talk to us about what a terrible a time he had, while the elder one also had a terrible time but refused to even come back and collect his $100). In that case, the father refused to pay (and still refuses to pay) anything at all. As we were modifying child support, the Judge told the father that if he didn’t pay child support, eventually he was going to owe his ex-wife tens of thousands of dollars. He told him something important, which is that the boys are upset with him now and that that upset may not last forever, but if he did not pay her the child support, there would come a time when the boys were young men and thinking about their relationship with their father, and if they knew (which they eventually would) that he did not pay his support, it would weigh on them and color their decision to heal their relationship with him. The Judge may have overstepped in making that comment (and maybe not), and he is no psychologist either, but we come to a point where we work with enough families and kids to recognize the types of dramas that play out repeatedly enough that they start to become patterns.
I will talk more about teenagers and the way an ice-wall can form that must be cracked early on or it may take years in a later chapter on child custody and timeshare issues, but suffice it to say that, child support is particularly important as a signal the payor parent sends to the children that he or she is involved and believes in the children. It is a signal that they are engaged as parents and that they still care enough about the other parent as to honor this obligation to pay support. You never want the mother of your children saying: “I did it all without your dad’s help” or, worse, “thank god for Jack, he supported you guys all growing up because your dad would never pay support” and then your adult daughter considers having step-dad Jack walk her down the aisle. Some of the dads about whom I’ve been most proud are the ones who have said, “I know my kids are siding with their mom in all of this, but I have never missed a support payment and I am still putting money away for college.” I believe that this allows for healing. Maybe not now, but one day the kids will know that you honored your obligations each month, on time, no questions asked.
That said, just because you have an obligation to meet, does not mean you should not do everything you can to ensure you are paying the correct amount. As you calculate support payments, follow the basic principals (and their corollaries) that: 1) anything that tends to increase your net cash flow as against your tax liability will increase your support, 2) anything that you are obligated to pay, whether health insurance premiums, taxes, child or spousal support from another marriage, or children that you take care of from another marriage, will impact your net spendable income negatively and will reduce the amount you have to pay, 3) any mandatory costs – unreimbursed health care or child care costs – are added on at 50 cents on the dollar, 4) your child support is for daily living and does not include school clothes, shoes, athletic team fees, field trips, etc., 5) discretionary deductions from your paycheck for 401K contributions, HAS contributions or charitable deductions are not considered mandatory and may impact your support payment if they are pre-tax contributions because they are income that you do not get taxed on and 6) mortgage payments are generally beneficial to the payor because of the mortgage interest and property tax deductions in the tax code, so paying more may actually shield more income and increase your support payment. Finally, remember the counter-intuitive principle that new spouse income will actually decrease the support payment to the payor because new spouses have no obligation to support their new spouse’s children so their income is not available for support, but it may increase the tax bracket and result in higher taxes on the payor’s income, reducing income available for support (remember my landscaping client who ended up paying child support into a household from his $3,500 per month income into a household with more than $200,000 in income, $50,000 of which was a tax-free pension, because the new spouse was responsible for half of the total income, kicking the family’s income tax bracket up).
Finally, finally, finally: Please pay your support. It’s good for your children. It’s good for your ex-spouse (making it good for you). Remember that unstable ex-spouses want to move to Sacramento to live with their parents or they move unsavory new paramours into the home to help pay the bills. If you want to reduce your support obligation, don’t quit your job (although working less overtime is both desirable and reasonable) but do spend more time with your kids. Always, always, always spend as much time with your kids as possible. Buy time with them if you need to by agreeing to a child support payment at a lower time share percentage in exchange for more time. For the other parent, the extra few hundred dollars might be the very reason she is limiting your time with the kids and if you put it all into perspective, a few hundred dollars a month for precious time with your kids will be worth it now and forever.
