Updates Posted for Kansas, Missouri, ArrearsMaster®, and Bradley ParentingTime®

Updates for the following programs were issued on July 7th, 2017.

  • Kansas Child Support Calculator
    This update includes changes to tax calculations as a result of the Legislature’s override of the Governor’s veto of the legislation reversing the small business taxation revisions of 2012 that has restored income taxation of LLCs, Sole Proprietorships, Partnership, many farms and “Mom and Pop” businesses, effective July 1, 2017.
    The update also includes the latest Interstate Payroll Adjustment data from the Bureau of Labor Statistics.

 

  • Missouri Child Support Calculator
    In Missouri, completely new items include a low income support calculation, as well as revisions to the Basic Child Support table became mandatory July 1, 2017.

 

  • ArrearsMaster® Calculator
    This is a regular update of interest rates in each state. In particular it updates the Kansas rate effective July 1, 2017 to 5.75%, up 0.75% from 2016.

 

  • Bradley ParentingTime® Calculator
    An exciting new feature has been released in this version, the Annual Hourly Calendar. This new calendar adds the ability to create a calendar for an entire year and determine custody percentage on an hourly basis. It includes holidays and a number of new reports.
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Kansas Cover Page Changes

In our ongoing effort to improve the Bradley Child Support Calculator for Kansas, we’ve redesigned the Cover (Summary) page. Although not a required form, it can be a handy reference for your file, your client, or the judge!  

The Cover page contains a lot of information on a single page – details of children’s residency, parent’s maintenance and expense obligations, and parenting time sharing.  It also details the income tax considerations adjustment and support amounts. It covers sole residency, shared residency and divided residency. 

We hope the expanded information will make understanding the sometimes complex child support calculation and custodial arrangements easier.

Posted in Child Support, Child Support Guidelines, Family Law, Uncategorized

Electronic Filing Expands in Kansas Courts

E FileChief Justice Lawton Nuss recently reported “In May, our district courts surpassed the 1-million mark for documents processed that were filed electronically.”

All state courts in Kansas are now able to receive electronically filed court documents (but only from Kansas attorneys).

Lawyers in good standing who are licensed in Kansas may electronically file in any state court. Self-represented parties who are not lawyers must still file paper documents in all courts.

Currently, electronic filing is required in the Supreme Court and Court of Appeals, as well as in 12 district courts covering 45 counties. The remaining district courts accept electronic filing but currently do not require it. More are expected to make electronic filing mandatory in coming months.

District courts that require electronic filing are:

  • 2nd:   Jackson, Jefferson, Pottawatomie and Wabaunsee counties
  • 6th:   Bourbon, Linn and Miami counties
  • 7th:   Douglas County
  • 8th:   Dickinson, Geary, Marion and Morris counties
  • 10th:   Johnson (which will accept PDF forms for eFiling)
  • 12th:   Cloud, Jewell, Lincoln, Mitchell, Republic and Washington counties
  • 16th:   Clark, Comanche, Ford, Gray, Kiowa and Meade counties
  • 21st:   Clay and Riley counties
  • 23rd:   Ellis, Gove, Rooks and Trego counties
  • 25th:   Finney, Greeley, Hamilton, Kearny, Scott and Wichita counties
  • 26th:   Grant, Haskell, Morton, Seward, Stanton and Stevens counties
  • 27th:   Reno County (civil only)
  • 28th:   Ottawa and Saline counties

Kansas district courts process more than 400,000 cases a year and the switch to electronic filing means court workers are no longer required to manage paper files. This reduces paper, mailing and file storage costs for both courts and lawyers.  It also reduces opportunities for error from misfiled documents or incorrect data entry.

For information on eFiling Bradley Software documents, click HERE to view EFILE the Bradley Kansas Child Support Worksheet.

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What Happened to the ITC (Income Tax Considerations) Adjustment??

40805168 - close up u.s. individual tax form 1040 with calculator and pen.Before 2012, Section A of Appendix V to the Kansas Child Support Guidelines simply said “If the parties share or alternate the exemption, Section A [the dependent’s exemption and the Federal Child Tax Credit] should not be used. Appendix V, Section A. Dependent’s Exemption and Child Tax Credit, CSG 2008, AO 216.

Before 2012, the examples in Section A of Appendix V also provided a mathematical formula to calculate the adjustment, if there was no sharing or alternating of the exemption(s):

The value of the exemption to the noncustodial parent may be calculated by multiplying the applicable exemption amount by the noncustodial parent’s applicable highest marginal rate at both the federal and Kansas levels. The combined federal and Kansas amount should be divided by 12 to arrive at the monthly amount. A portion of this amount would then be allocated to the noncustodial parent based upon his/her share of the combined income [emphasis added].

In 2012 however, Appendix V was redrafted to read

If the custodial parent agrees to alternate the exemption, the additional tax benefit to the noncustodial parent should be shared with the custodial parent equitably. If the noncustodial parent agrees to allow the custodial parent to claim the exemption in years that the noncustodial parent was entitled to the exemption [ed. note: the noncustodial parent is never “entitled” to the exemption unless the custodial parent consents in IRS Form 8332”], the additional tax benefit to the custodial parent should be shared with the noncustodial parent equitably. (emphasis added)

If the custodial parent elects not to alternate the income tax exemption for the minor child by executing IRS Form 8332 or a substantially similar form, the court shall consider the actual economic effect of the failure to alternate the exemption on the noncustodial parent and may adjust the noncustodial parent’s monthly child support accordingly.” Appendix, V Section A.1 – Dependent’s Exemption (emphasis added)

and

If the right to claim a qualifying child as a dependent is not shared between the parents, the monthly value of the tax credit should be included in the Income Tax Considerations adjustment. Appendix, V Section A.II – Federal Child Tax Credit

The mathematical formulaic approach set out in the pre-2012 Guidelines was eliminated by these new 2012 provisions, with the result that mathematically calculating a suggested ITC adjustment became impossible as a mathematical exercise.

Consider: “Multiply value A times value B” is a mathematical concept, whereas “shared equitablyor “adjusted accordingly” is not. The allocation of Income Tax Considerations adjustment thus becomes open to argument as to what is “equitable” or “fair.”

To be sure, the dollar amount of the economic tax benefit to each parent the TRV (Tax Reduction Value) is not hard to determine. The value remains (as it was before the 2012 revisions) “the applicable exemption amount [multiplied] by the noncustodial parent’s applicable highest marginal rate at both the federal and Kansas levels.”

(The TRV of each child as a dependent for either Mom or Dad can also quickly be determined by simply consulting the Tax Results report produced by the Bradley Kansas Child Support Calculator.™)

Things can get pretty complicated, however, if the right to claim a child as a tax dependent is alternated for future years, or is not limited to a single child, or where the family custodial arrangements are “creative.”

For example, in a given case, one could argue that if custodial parent Mom is allowed to claim Sarah (who would have a tax reduction value for Dad of $50.00 per month if he were allowed to claim her), while Dad is allowed to claim John (whose tax reduction value to Mom would be only $35.00 per month because Mom is in a lower tax bracket than Dad), it would be equitable to subtract the tax reduction value surrendered by custodial Mom for John ($35.00) from the tax reduction value denied to Dad for Sarah ($50.00) and view the Income Tax Considerations adjustment as having a value of $15.00 per month (reduction in Dad’s child support). In other words, the $50.00 benefit Dad could have realized had he claimed Sarah is offset by the $35.00 benefit he denied to Mom in claiming John, so the net tax reduction value lost by Dad is $15.00 per month – thus it is “equitable” to reduce Dad’s child support obligation to Mom by $15.00 per month.

What would be equitable, however, if Mom had denied Dad’s desire to claim John as his dependent, and offered to allow Dad to claim Sarah instead? Or should Mom’s refusal to allow Dad all of his requested parenting time with Sarah be considered? What about the children’s requests regarding custody arrangements? What of a teenager’s refusal to participate in parenting time to a degree that it affects a parent’s ability to claim the child as a dependent? What if Mom gets a “Head of Household” benefit for the children with her – should we reduce Dad’s child support by some percentage of the HOH benefit even if he has remarried and files a joint return with a new spouse (thus denying himself any HOH benefit)? The permutations are endless!

For the foregoing reasons, we are unable to suggest what the TRV of an alternated child should be.

For a simple, alternative approach, please see our blog item “Ignore the Alternated Child?”

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The Income Tax Considerations (ITC) Adjustment

6037112 - preparing taxes - concept suicideThe ITC adjustment is made up of four possible elements, some or all of which may be present in a particular case:

Income Tax Deduction. A portion of a tax payer’s income taxes can be saved through the ability to claim an additional exemption on the parent’s tax return for each dependent child. The value of the tax savings is equal to the reduction in the parent’s taxable income (the exemption value changes from year to year), multiplied by the parent’s income tax bracket. For example, if the exemption value is $4,050, and the parent’s income tax bracket is 25%, the tax savings is $4,050 x .25 = $1,012.50 per year or $84.38 per month for each child. A similar savings is available in the Kansas income tax. This ability to claim a child as an exemption can be transferred between the parents (or “alternated” from year to year).

Child Tax Credit. The Child Tax Credit permits additional Federal taxes to be saved if a dependent child is under the age of 17 at the end of the tax year. This is a “dollar for dollar” credit against the tax, not merely a reduction in taxable income The amount of the tax credit is $1,000 for each such child. THE CREDIT IS NOT RELATED TO THE PARENT’S INCOME TAX BRACKET. For example, the tax savings is $1,000 or $83.33 per month for each qualifying child REGARDLESS OF THE PARENT’S INCOME OR TAX BRACKET. The Child Tax Credit is, however, subject to a “phase-out” or reduction in the $1,000 credit for certain high income tax payers (beginning at $75,000 if the taxpayer files “Single,” $110,000 if the taxpayer files “Married filing Jointly”

Head of Household. The Federal and state taxes saved through reduced tax rates for a taxpayer who can file as “head of household.” The value of the tax savings is equal to the reduction in the parent’s taxes arising from the parent’s lower income tax bracket. For example, a taxpayer filing “single” with a taxable income of $50,000 pays taxes in the 25% Federal tax bracket; but if filing as “head of household” is in the 15% Federal tax bracket.

The “filing status” also affects the “standard deduction” amount – the reduction in Federal taxable income ($6,300 for the “single” filer; $9,300 for the head of household filer – a gain of $3,000); in Kansas the taxable income reduction is $2,500. Finally, a head of household filer in Kansas receives an additional exemption, which further reduces taxable income.

Note that a taxpayer can file “head of household” without claiming a dependent child. The fling requirement is simply that the taxpayer is unmarried at the end of the tax year, and provided a home for a qualifying person (child, stepchild, foster child, mother, father, sibling or other blood relative) for more than half of the year. Thus, for a divorced couple with two children, both parents can claim HOH status if one of the children spends one day more than half the year with each parent.

Standard Deduction. If, instead of itemizing deductible expenses, a parent elects to take the “Standard Deduction,” a tax savings is generated to the extent that the standard deduction exceeds the total deductible expenses which could have been itemized.

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2016 KS Bar Association Meeting

Kudos to the KS Bar Association for putting on a GREAT meeting this year in Wichita. We love attending these meetings where we meet so many of our customers and even meet some new friends along the way. The downtown Wichita area is such a nice place and the Hyatt was a great location for this meeting.

The staff at the KS Bar is to be commended for their hard work to put this together. We look forward to the meeting next year in Manhattan.

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What’s the Significance of that “Version Number” at the Bottom of the Worksheet?

UPDATE!At the bottom of each page of a Bradley Software child support worksheet (and each included report, like the “Income Tax Considerations Adjustment Report”) you’ll find a copyright notice which includes a reference to “Version xx.xx.xx” followed by our website address (URL).

Example:

KS2016 Version 29.02.17 Copyright @ 1992-2016 Bradley Software LLC  www.BradleySoftware.com

The significance of the version number is that it tells you how “up to date” was the software which was used to prepare the worksheet (and allied reports).

In the weeks following the release of a new Administrative Order, we find ourselves very busy updating the prior version of the software to reflect our understanding of any changes made in the new Guidelines.

Admin Order 284 was one that really kept us hopping, because there were extensive changes in things like the Income Tax Considerations Adjustment (See our blog item “What Happened to the ITC Adjustment?”)

So if your worksheet was prepared with a higher version number than your opponent’s (e.g. 29.02.17 vs 29.01.16), you can be sure that yours was generated by the most recently cross-checked, reviewed, updated, and error-free software we’ve been able to create.

This same observation applies to our “single-case” web-based child support calculator (www.ChildSupportTools.com), frequently used by pro se litigants, and lawyers who don’t have our professional version.

It pays, therefore, to check the version number in the copyright notice, and to heed the warnings that your software should be updated.

BTW, although many judges use our software on the bench, you should also check the version number on the Judge’s worksheet to be sure it’s up-to-date. Sometimes, in the press of managing a busy docket, update warnings get overlooked by the IT department.

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