As discussed in a previous article in January, we’ve been working hard on updating our calculators based on the tax changes caused by the Tax Cuts and Jobs Act (TCJA). Today we’re excited to announce the updates for our Kansas child support calculator have been published and are ready for you to use! The other calculators we offer through Bradley Software and Child Support Tools were unaffected, so none of them require updates at this time.
All of our programs automatically check for updates, so while there’s nothing you need to do before using the updated calculator, we wanted to take this opportunity to walk you through what changed, what didn’t, and why.
Details on the Kansas Child Support Calculator Updates
The new Kansas child support calculator reflects the changes published on March 15, 2018. Under present law, most of the changes expire after 2025. Please note that changes in deduction and taxation of maintenance do not take effect until January 1, 2019, and are, therefore, not revised in this update.
The majority of these recent changes had to do with updating the income tax considerations (ITC) adjustment, which we’ve discussed in earlier Kansas Child Support Guidelines, as well as in some of our previous blog articles.
The update to the program also reflects all changes in the Interstate Payroll Adjustment based on the Bureau of Labor Statistics publication dated March 8, 2018.
How the TCJA Impacts the ITC Adjustment
The TCJA made substantial changes to the ITC adjustment, which is made up of four possible elements, some or all of which may still be present in a particular case. Here’s how the TCJA has impacted each of these four elements for Kansas child support:
1. The Income Tax Deduction
The TCJA abolished the personal tax exemption, which previously formed a major component of the ITC, providing a savings through a tax exemption of $4,050 for the taxpayer and for each dependent.
Previously, the right to claim the Kansas exemption for a dependent ($2,250) could be shared, transferred, or alternated from year to year between parents. Whether this option is still available is not yet clear under Kansas law.
A personal tax exemption, however, remains available in Kansas income tax and provides some tax savings.
2. The Child Tax Credit
The child tax credit (which should not be confused with the child and dependent care credit) permits additional federal taxes to be saved if a qualified child is under the age of 17 at the end of the tax year. The definition of a “qualified” child is the same as was formerly defined as a “dependent.” For child tax credit purposes, this will usually mean that the child must be related to the taxpayer in one of several ways (son, daughter, grandchild, etc.), must live in the taxpayer’s home more than half the year, and must not provide more than half of his or her own support.
The child tax credit is a “dollar for dollar” credit against the tax, not merely a reduction in taxable income. The amount of the tax credit is $2,000 for each qualified child under the age of 17 at the end of the tax year and (this is new) $500 for each qualifying person over the age of 16. The child tax credit is, however, subject to a “phase-out” or reduction in the $2,000 credit for certain high income taxpayers (beginning at $200,000 MAGI if the taxpayer files “single” and $400,000 if the taxpayer files “married filing jointly”).
3. Filing as Head of Household (HOH)
Federal and state taxes are saved through reduced tax rates for a taxpayer who can file as head of household (HOH). 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 as single with a taxable income of $50,000 pays taxes in the 22% federal tax bracket; however, if filing as HOH, the taxpayer falls into the 12% federal tax bracket.
Note that a parent can file as HOH without claiming a dependent child. The filing requirement is simply that the taxpayer is unmarried at the end of the tax year and has provided a home for a qualifying person (child, stepchild, foster child, mother, father, sibling, or other blood relative) for more than half of the tax 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.
4. The 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. For 2018 and later years, the standard deduction is increased to $12,000 for a single taxpayer, $18,000 for a HOH taxpayer, and $24,000 for a married taxpayer. In Kansas, the taxable income reduction is $2,500. Finally, a HOH filer in Kansas receives an additional exemption, which further reduces taxable income.
To buy or learn more about our child support calculators and other programs, visit our Child Support Tools website (for parents and attorneys handling a low case volume) or visit our Bradley Software website (for attorneys handling a higher case volume).