What you need to know about child support.
Danielle Hoston: It's a known fact that the vast majority of non-custodial parents are fathers, and with Father's Day around the corner, I thought I'd venture into every father's favorite money topic ... child support. We've all heard of the "deadbeat dads" who deserve every bit of the bad rap they get, so this week I decided to take a closer look at how child support guidelines are determined, where the flaws are, and whether or not they are fair. Here's what you need to know to make a decision.
Income Shares Model
The most commonly used model for child support is the Income Shares model. It is based on the concept that the child should receive the same proportion of parental income that he or she would have received if the parents lived together. Although each state has its own guidelines, the formula generally combines the parents' income and then multiplies it by a particular percentage (based on the number of children) to arrive at a support obligation. This number is divided in half and the non-custodial parent will be obligated to pay it.
As a California native who has heard countless nightmare stories about child support, I was surprised to learn that Massachusetts is actually one of the most notorious states for "unfair" child support guidelines. In the state of Massachusetts, non-custodial parents can have a standard of living that is as much as 40% lower than that of an equally earning custodial parent and still be required to pay their half.
How is this possible?
Child support calculations do not take into consideration the tax benefits that custodial parents receive. Child support is not deductible for the non-custodial parent, and is not taxed as income for the custodial parent. Therefore, the non-custodial parent is responsible for all taxes (federal, state, local, social security, and FICA) on the paid child support. Furthermore, in most cases, only the custodial parent can claim the tax exemptions, tax credits, and take advantage of the lower tax rate for "head of household" filing status. Additionally, non-custodial parents often have expenses of their own (travel/transportation, extra clothes, etc.) related to the care of their child(ren) that are not accounted for in the initial calculation of child support.
Once the child support amount is determined, many fathers question how the child support is being spent. In California, it is assumed that child support received is being spent on the child. In at least 10 states (CO, DE, FL, IN, LA, MO, NE, OK, OR, and WA), however, non-custodial parents can demand a full accounting of expenses and spending of child support from custodial parents.
Deadbeat Moms ... and Dads
In my humble opinion, men that don't work, barely work, or hide their money in order to reduce their child support are disgusting. On the other hand, mothers who don't work, barely work, or inflate their children's expenses in order to turn their child support into a paycheck are pretty disgusting as well. They are equally "deadbeat" and the system should address child support guidelines accordingly.
I'd like to wish the happiest of Father's Days to my father and to the fathers who are paying their child support and lovingly raising their children. I'd also like to encourage both mothers and fathers to genuinely consider the best interests of their children when it comes to the use and payment of child support. A fair agreement on these matters can be the greatest step in the right direction for parents who are separated and help them toward a path of successful joint parenting.
Do you believe that current child support guidelines are fair or unfair? If you receive or pay child support, is the amount correct, too high, or too low?
|Danielle Hoston is a business and finance expert with Hoston and Associates. She is the mom of one and resides in Los Angeles.|