Adjusted Gross Income

Adjusted Gross Income IconA box in which to enter each parent’s annual “Adjusted Gross Income” is a new required element on the Income page. Adjusted Gross Income is simply a parent’s gross income reduced by thirteen different adjustments (expenses) such as,
  • alimony paid,
  • retirement contributions,
  • student loan interest,
  • educator expenses,
  • moving expenses,
  • HSA contributions, and
  • the deductible portion of SE tax, among others.
Unlike other elements on the Income page, which can be entered either as annual or monthly amounts, the Adjusted Gross Income (“AGI”) is always an annual amount.
AGI is the starting point for determining a parent’s income tax bracket, and it bears directly on valuing dependent exemptions, child care tax credits, and child tax credits.
The Bradley calculator will suggest an estimated AGI using current monthly income and estimated alimony (maintenance), but the program does not collect enough data to provide anything more than an estimate. The suggestion is displayed on the green bar directly beneath the AGI input area. To use the suggested amount, simply double-click on
the suggestion, displayed in yellow.
Annual Adjusted Gross Income
The very best place to get a parent’s AGI, however, is from their most recent income tax return (Line 37 – Form 1040). An example of the AGI section of IRS Form 1040 appears below.
Adjustd Gross Income
Be sure to enter an AGI value for each parent. If no value is entered, the calculator cannot determine a parent’s income tax bracket, and therefore will not be able to value dependent exemptions, child care tax credits, and child tax credits, or calculate the Income Tax Considerations adjustment for Section E.
Posted in Child Support, Family Law, Taxes

Calculating Support for Partially Time-shared Children

 

Family line

I recently received this inquiry from a subscriber:

“I have a case in which the mother and father have shared custody of two children and the mother has primary residential custody of the third child.  The mother will claim all children on taxes.  The parties will share direct expenses with regard to the two children that they have shared custody. How do you input this on the child support calculator?”

This is another example of the “creative couple” dilemma  – How to apply the Guidelines for support where the parties’ time-sharing arrangements aren’t addressed by the Guidelines.

There are two residential “arrangements” in the scenario presented; Mom’s and Dad’s.

Since the guidelines don’t contemplate some children in a family being time-shared (and the rest not), we have to separate the children into two groups (time-shared and not time-shared) to determine the support for each group (since there should be an Equal Parenting Time child support adjustment for the time-shared children). I call this a “faux divided custody.”

In a true “divided custody,” the support for the two households (Mom’s vs. Dad’s) would be netted together to avoid each parent sending the other parent a check each month. The lower support obligation is subtracted from the higher support obligation) and the support differential would be payable by the higher obligated parent, but since we’re only separating the children for support calculations, and the support will be payable by only one parent, we’ll add the support amounts together to determine that parent’s total support obligation amount.

Proceed as follows:

Show Dad as “Residence with” parent for each of the two shared kids, & show them as time shared equally, with shared expenses.

Show Mom as the “Residence with” parent for the third, “non-shared” child.  Answer “No” to the “time shared equally?” question.

Show Mom as receiving the tax deduction on all three children.

If all three children were in the same household (rather than the “faux” divided custody) their support would be determined using a three-child support table. We can ensure the same usage in the “faux” calculation, by indicating in the Multiple Family Application section on the Children page that Mom has 1 “other child” and Dad has 2 “other children,” and selecting “Yes” for both parents.  That forces a three child table to be used for the one child in Mom’s home (counting as “other children” the two in Dad’s home) when calculating the worksheet for Mom’s home; and also a three child table to be used for the two children in Dad’s home (counting as “other children” the one in Mom’s home) when calculating the worksheet for Dad’s home. That may sound backward, but remember that in the MFA inputs, the two children in Father’s column are the two in his primary custody (although time-shared) for calculating Dad’s obligation to Mom for the single child in her household. Similarly, the one in Mom’s column in the MFA inputs is the single non-shared child in her primary custody.

 You get two worksheets (since it’s a faux “divided” custody). If Dad has the higher line F.3 obligation on the worksheet for the shared children, add the two support amounts together. Why? – the support for the shared children (altho’ reduced by the sharing) will be payable by Dad (as the higher obligated parent), and  the support for the unshared child will also be payable by Dad (since Mom is the custodial parent).

However, if Mom is the higher obligated parent for the shared children (which would make her the support Payor) and the custodial parent for the unshared child (which would make her the support recipient), netting together the two support obligations would be appropriate and the net support differential would be paid by the parent with the higher obligation to the other parent.

Posted in Uncategorized | Leave a comment

Parent Time Override

percentagesAt the request of several subscribers, we’ve added an “override” capability to the Parenting Time adjustment on the Sec. E Adj. page. When Equal Parenting is not selected on the Children page, you can enter a non-standard percentage (not merely 5%, 10% , or 15%) as the adjustment in the non-custodial parent’s child support in consideration of the amount of time the child(ren) spend with the non-custodian.

We hope it will be useful in situations where the court has the discretion to reduce the child support by up to 50% in cases of extended parenting time.

Posted in Uncategorized | Leave a comment

IGNORE THE ALTERNATED CHILD??

tug_of_warWhy do we say a child shown as “alternated” in the Tax Deduction To field will be ignored in calculating the Income Tax Considerations adjustment? Because the Kansas Child Support Guidelines (Administrative Order 284) provide guidance for the calculation ONLY when the parents DO NOT alternate the exemption.

Consider: tax deductions for a dependent child are allocated by the IRS on an annual basis to the custodial parent (the parent with whom the child lives the majority of the year, or the higher income parent). So for an “alternated” child, which parent’s tax rate should be used in calculating the value of the deduction?

It’s fairly easy to calculate the value of a dependent child tax deduction to a parent when you know a few key elements: the parent’s income, the child’s age, etc. But if you don’t know the parent’s income (and hence, the parent’s state and Federal tax rates), or the child’s age (and hence, whether the child qualifies for the Child Tax Credit for children under 17), it becomes impossible to determine the value of the deduction (and hence, the Income Tax Considerations adjustment) accurately.

Consequently, we recommend avoiding the “alternated” concept in designating which parent should receive the dependent child tax exemptionSince the exemption is an annual matter (and we all file our tax returns annually), just select the parent who should get the tax deduction this year (the current year). Then, rerun the child support calculation again early next year, selecting the parent who should receive the tax deduction next year.

If you run the child support calculation each year, in late December or early January, you’ll also have the benefit of updated program elements like income tax rates, and current data regarding the child’s age (for the Child Tax Credit and Child Care Tax Credit, for example), and parental incomes.

Simple, when you think about it!!

Posted in Uncategorized | Leave a comment

DATES THE EASY WAY

CalendarGraphic


In each of our programs, there are three EASY ways to enter a date like September 7, 2006:

1) Use the drop-down calendar by clicking on the button at the end of the date blank and then scroll backwards to the appropriate calendar and click on the date (this method requires no typing, and is fast if the date is a few months ago; slower if it is several years ago);

2) Use the DATE TEMPLATE. Type it in as MMDDYY (090706). The date is entered for you as 09/07/2006 OR

3) Use the DATE TEMPLATE. Type it in as M/D/YY (9/7/06).The date 09/07/2006 is entered for you.

Posted in Uncategorized | Leave a comment

Update! REIMBURSEMENT FOR CHILD SUPPORT “OVERPAYMENTS” CREATED BY RETROACTIVE SSD PAYMENT

hand_over_money

In September 2013, the Kansas Court of Appeals held, in a 2 to 1 decision in In re Marriage of Stephensonthat where the children’s father made his court ordered child support payments, he was not entitled to reimbursement from the children’s mother where she later received a retroactive Social Security Disability lump sum payment covering the same months, even though he would have been entitled to credit for the monthly disability payments made to the children’s mother as a result of the father’s disability if the SSD payments had been contemporaneous rather than retroactiveCommending the father for his timely payment of his child support obligations, the Court nevertheless treated the excess payment resulting from the retroactive lump sum as a “gratuity” or gift to the children. The Court’s opinion traces the rationale of the decision and is available online at http://www.kscourts.org/Cases-and-Opinions/Opinions/CtApp/2013/20130913/109121.pdf

On October 9, 2015, however, the Kansas Supreme Court reversedholding that a district court may—but does not necessarily have to—grant a credit to a child-support obligor who is current on child support when a lump-sum payment of accumulated social security disability insurance derivative benefits duplicates the obligor’s support payment. A credit, if granted, may be used to offset other support obligations imposed by the court on the obligor. Alternatively, the district court might adjust an obligor’s [future] support obligations, require reimbursement of the duplicative payments from funds that are discrete from the social security benefits, or fashion some other equitable remedy permitted under applicable federal statutes and regulations. Full opinion available at http://www.kscourts.org/Cases-and-Opinions/opinions/SupCt/2015/20151009/109121.pdf

Posted in Child Support, Family Law | Leave a comment

Child Support Guidelines for Kansas in 2016

The NEW Kansas Child Support Guidelines are in Admin Order 284 – effective January 1, 2016.

After the Kansas Child Support Guidelines Committee reviewed the existing guidelines  (AO 261) and recommended changes to the guidelines, the Kansas Supreme Court approved new guidelines  with an effective of Jan 1, 2016. We at Bradley Software have been closely following the committee’s actions and recommendations. We are updating our  2016 child support program and rigorously testing it.

If you want to follow what we are doing please sign up to follow our blog.

Click here to view the KS Court web page with both the 2015 and new 2016 guidelines.

During our review of the new guidelines, we’ve noted important changes that Kansas lawyers and litigants need to know about.

Changes in Kansas Child Support calculations.

1. Party identification labels: (i.e., same sex marriage considerations) The former standard labels “Mother” and “Father” are now replaced with the more generic “Party Name” and “Party Name.”

The Bradley Child Support Calculator still provides the flexibility to use whatever labels you wish so long as they are spelled differently. You can use “John” and “Jon,” but not “Mary” and “Mary.”

You can, of course, still use “Mother” and “Father” where appropriate and not confusing.

2. Support table amounts are generally increased; Extended income factors are increased, and Poverty levels are updated

3. The Not Less Than Zero rule (NLTZ ) – which relieved the support recipient from paying any part of the child’s direct expenses (an item normally paid entirely by the support recipient) is now discretionary with the judge. You will find a setting in the 2016 Options page to turn the NLTZ rule on or off.

4. The concept of “Extraordinary expenses” has been deleted. This concept, which was added to “Special Needs” category in 2012, is now rejected except to the extent included in the new definition of “Direct Expenses.”

Direct expenses are defined to be “fixed expenses paid directly to a third party, such as a school, church, recreational club, or sports club to allow participation in an activity or event, or to attend school.” Direct expenses also include all necessary supplies and equipment purchased to  support such activity. Direct expenses include all school and school-related expenses including school lunches, as well as extracurricular activities, and clothing.

6. A warning is now included about the impact of the Affordable Care Act (“Obamacare”) and the penalties for failing to provide health insurance for a child. The penalties are assessed against the parent claiming the child as a dependent and may have some impact on parental decisions about sharing the dependent deductions.

“Generally, because of the ACA, the person claiming the dependency exemption is responsible for ensuring that health insurance is provided for the minor children. If health insurance is not provided, the person claiming the exemption risks being penalized for failure to provide. As such, the parties may not want to share the tax exemption(s). In this situation, the value of the exemption(s) must be determined as provided in Appendix V which amount should then be added on line C.3 of the worksheet.”

7. Equal Parenting Time percentages have been adjusted downward where clothing is maintained in each parent’s household.

8. Updated Tax rates are included in 2016 Bradley Child Support Calculators.

9. Updated Interstate Pay Differential data included in 2016 Bradley Child Support Calculators.

1o. Margins on Worksheets and Reports have been adjusted to meet revised formatting requirements of several Kansas District Courts.

Posted in Uncategorized | Leave a comment