Calculating the Income Tax Considerations adjustment manually is harder than it may first appear (unless you are a tax professional or have the Bradley Child Support Calculator). A number of terms are used in the Guidelines which are easily confused – Income, Gross Income, Combined Gross Incomes, Adjusted Gross Income, and Taxable Income, just to name a few. It is very important to know the differences and the part each plays in the calculation of the child support obligation.
Combined Gross income, for example, is the index value used to look up the basic child support obligation on the Child Support Tables in the Guidelines, once you know the number of children in the family and their ages.
The calculation of the Income Tax Consideration Adjustment (Section E of the child support worksheet), however, requires the use of a parent’s “Taxable Income” in selecting the appropriate income tax rate (Federal and Kansas) to determine the value of the dependent exemption which a custodial parent refuses to share with the other parent.
Unfortunately, although Appendix V of the Guidelines sets out the factors used to determine the “Taxable Income,” it does not illustrate the method. Here it is:
Federal Taxable Income = Annual Federal Gross Income – (Standard Deduction + Parent’s personal exemption + (dependent exemption value x number of dependent children)).
Kansas Taxable Income = Annual Kansas Gross Income – (Standard Deduction + Parent’s personal exemption + (dependent exemption value x number of dependent children) + an additional dependent exemption if parent files as Head of Household).
(It should be noted that the Federal Gross Income, and the Kansas Gross Income are not necessarily the same, since Kansas does not tax self employment income from partnerships, sole proprietorships, LLCs etc. – although such income items should be included in the parents’ gross incomes when consulting the basic child support tables.)
Once the Federal Taxable Income amount is known, then the applicable Federal Income Tax Rate can be used to calculate the value of each child who can be claimed as a dependent. Similarly, Once the Kansas Taxable Income amount is known, then the applicable Kansas Income Tax Rate can be used to calculate the value of each child who can be claimed as a dependent on the Kansas income tax return.
The Bradley Child Support Calculator handles all of these calculations for you, automatically, and details the calculations in two reports – the Tax Results report and the Tax Adjustments report. Either or both can be printed for presentation to the Court in support of a proposed Child Support Worksheet.