Child Support: Detailed Explanation

In Illinois, the amount of child support one is likely to receive is defined by statute, but how much one could receive may vary greatly based on numerous factors, further discussed below. The main statute to look at is section 505 of the Illinois Marriage and Dissolution of Marriage Act. Section 505 states the minimum amount of support that the non-custodial parent should pay as a percentage of the non-custodial parent's net income (on the right in the table below) to the custodial parent (the parent with whom the child or children reside(s)), depending on the number of children (on the left in the table below) , as follows:

1 20%
2 28%
3 32%
4 40%
5 45%
6 or more 50%

For example, if you are the custodial parent of one child, your child's other parent should pay you 20% of his or her net income for child support, and if you are the non-custodial parent of four children, you should pay your children's other parent (assuming all children are from your relationship with that other parent and all are living with that other parent) 40% of your net income for child support. Depending on which side of the equation you fall, this might seem fair or unfair to you. For instance, 20% of net income is a big chunk of your budget, perhaps this amounts to your mortgage payments or more. On the other hand, if you have the children living with you, it might seem unfair that the non-custodial parent gets to live on 50% of his or her net income while you receive the other 50% to take care of the 6, or more, children. Hopefully, this Post will supply a better understanding of this arrangement, some reasons for it and alternatives to it.

First, some real basics. As can be seen from the above discussion of the section 505, there are some components necessary for child support: (1) child or children, (2) custodial parent and (3) income earned by the non-custodial parent. There are some exceptions, which will be discussed later in this Post.

Factor one, child or children. The obligation to pay child support for a child continues until that child is (1) a minor, eighteen years of age and (2) has graduated high school (but not after the child's nineteenth birthday). Some exceptions here would include a child that is older, but has been adjudicated disabled, as subject of a later Posting.

Factor two, custodial parent. For a parent to be custodial there must be a court order designating the parent as such. Therefore, there must be a court proceeding. With limited exceptions, the proceedings would be a divorce (now known as a "dissolution of marriage") or parentage (also known as paternity action or action to established a father-child or mother-child relationship). Such proceedings will culminate, either by agreement, or by Trial in one parent being named as custodial or the primary residential parent, with parenting time or visitation for the other parent. There are some exceptions, such as other parenting arrangements and temporary orders regarding physical possession, which will be discussed later in this Posting. The main idea here is that if there is no order, there is no explicit obligation to pay child support (each parent has a constant obligation to support his and her unemancipated minor child and can be prosecuted for failure to do so, but this is a matter of criminal law and beyond the scope of this Blog).

Third factor, the non-custodial parent's income. The non-custodial parent must have an income, but this does not mean that the non-custodial parent must be working. Income for purposes of child support is income from any source. Therefore, interest on investment, rent from rental property, gifts from parents of the non-custodial parent all may constitute income. Again, there are exceptions here, as imputed income, that will be discussed later in this Post.

Assuming all three factors are present, how is the child support actually calculated? The statute calls for a percentage of net income. Net income for child support purposes constitutes gross income (all income from all sources) minus (1) Federal income taxes, (2) State income taxes, (3) Social Security or FICA payments, (4) Union dues, (5) health insurance premiums for the non-custodial parent and his or her dependents, (6) prior obligations of child support or maintenance (formerly known as "alimony") actually paid, (7) mandatory retirement contributions and (8) repayment of debts actually incurred for production of income, necessary medical expenditures or reasonable expenditures for the benefit of the child or the other parent. There is also some debate, with different courts coming to different conclusions, on whether expenditures for the production of income should be subtracted from income before calling it net income for purposes of child support. For instance, if a business owner must rent a car in a foreign city to close a deal, can the cost of the rental he paid be subtracted from gross income? This is definitely a point arguable either way and should be explored with your attorney in the appropriate situation.

As pointed out previously, income for child support purposes is income from all sources. Therefore, if the non-custodial parent is not forthcoming about his or her income, it is imperative to investigate the non-custodial parent's finances thoroughly. If the non-custodial parent is not working, his or her expenses should be analyzed, as the money for payment of expenses must be coming from somewhere. If the non-custodial parent owns a business in part or in whole, he or she may be controlling his or her income, in which case, the company income may need to be evaluated as it might become apparent that he or she is only waiting to receive that income, in a bonus or commission payment later, after the litigation to determine child support is over. For that matter, it must be remembered that commissions and bonuses are also included in income for child support purposes.

The business owner non-custodial parent presents other complexities. The non-custodial parent may have the business pay some of his or her expenses, in which case the expenses should not be deducted to arrive at net income for child support. Furthermore, if those reimbursements are for expenses not incurred solely for the production of income, they certainly should not be subtracted to arrive at net income for child support purposes. For instance, if the non-custodial parent is having the business pay for his or her car or lunches, this saves his or her income that would otherwise have to be spent on car or lunch expenses, and thus, should not be deducted. Basically, no deductions are allowed that most of us do not have the benefit off and that are not covered by the statute.

Another possible way to hide income, particularly in cases of business owners or co-owners, is retirement contributions. It must be remembered that only mandatory retirement contributions are deductible for arriving at net income before calculating child support. Therefore, the company must require a certain amount of the employee's income to be contributed to the employee's retirement plan. If the non-custodial parent has a much higher percentage of his or her income taken out for retirement than other employees, even if the contribution is labeled as mandatory, there may be undue influence, and if demonstrated, a Court is unlikely to let the non-custodial parent get away with it.

On the issue of retirement contributions, there is a common question of employer paid benefits. For example, if the employer contributes to the employees retirement plan, that is income for child support purposes in most cases. Same is true of other benefits, just as with the business owner "expensing" his living expenses through his or her company, if the employer pays for his or her car, that is added to the non-custodial parent's income for child support purposes.

There are numerous other issues that can arrive in the context of determining income for child support, but this Posting will close the discussion of this issue by mentioning just three more. First one is K-1 income, which is interest income, named K-1 income for the section of the IRS Code wherein it is discussed. K-1 income is received as interest in for instance a partnership. A partner in a law firm, for example, may or may not receive a salary (which would be reported on form W-2), but may receive interest in the partnership (law firm). He or she may also not receive that interest as it may be reinvested into the business, which may or may not be legitimate. Many arguments may be made for either side, and a competent attorney should be consulted by each party.

Second, there is the non the non-custodial parent who incurs debt to live, and then, files bankruptcy. If he or she succeeds and all of his or her debt is discharged, an argument may be made to the court that the guidelines set forth in the statute are minimums and a non-custodial parent with minimal expenses as a result of having all debts discharged has more income available to pay more child support than that minimum.

Third, there is the non-custodial parent with fluctuating income. In such cases, the court has authority to average his or her income over the last three and sometime, the last five years. For this procedure to be invoked, the fluctuations must be substantial.

What if the debt free or debt ridden non-custodial parent is not earning any income at all? Income may be imputed. To impute income means to pretend that the non-custodial parent is earning a specific amount of income, regardless of whether he or she is actually earning it. This is an extreme remedy and courts are right to employ it in only limited circumstances.

Basically, for the court to impute income, the non-custodial parent must be either (1) not working completely by his own choice or (2) be earning an income that is nearly impossible to determine because of his or her failure to be forthcoming with all relevant information and documentation. In the case of the non-working non-custodial parent, his or her income may be imputed based upon his or her earning history. In the latter case, you may need to look to the non-custodial parent's life style and expenses. The court may assume that the income is equal to money spent on his or her lifestyle.

Does this mean that a non-custodial parent cannot quit his or her job? Well, almost, but not quite. The non-custodial parent cannot voluntarily lower his or her income if he or she has an obligation to support a child. Therefore, you must find a job before you quit a job and that second job should pay approximately the same as the previous one. Of course, there are arguments that the non-custodial parent should explore with his or her attorney to the contrary. For example, the new, lower paying job may have higher long-term earning potential, in the end, benefiting all, as child support would eventually be increased beyond what would be payable based on the previous job. Another example is a previous job that posed a health risk that would likely shorten the non-custodial parent's earning life, if not life altogether.

Having covered most of the issues in the typical parenting arrangement, the less typical parenting arrangement should be covered. What if the parents are sharing residential custody by either (1) each parenting the child about 50% of the time or (2) each parenting the same number of children the same amount of time. In either case, the most common way to handle the situation is by (1) the parent earning more, paying the difference of statutory child support to the other parent or (2) if the parents are earning substantially the same amounts, each paying for the child's expenses incurred during his or her parenting time or simply splitting all of the child's expenses 50/50.

What if you and your spouse do not want to pay or receive child support? You cannot make that decision, at least not without the court's approval. Child support is a right of the child and an obligation of each parent, and is decided on what is termed "the best interests of the child" standard. In certain circumstances, the court will approve a "reservation" of child support. If child support is reserved, it means that the court has agreed to not decide the issue for the time being and if either party comes before the court at a later date, the court will decide how much child support to award at such time.

Why would anyone not want to receive child support, outside of the above examples of 50/50 parenting with similar incomes? In most instances, the answer is that the parent that could receive child support, is receiving money in another manner. For instance, through a larger portion of marital assets, smaller portion of marital debts or maintenance.

Trading the obligation to pay child support for keeping less of the marital assets (or more of the marital debts) is generally a bad bargain for the non-custodial parent. The reason is that child support in Illinois is always modifiable. This means, that no matter what your agreement says, even if approved by the court, the other parent can come back to court and seek child support or more child support. For example, if your divorce decree says that you will pay $10 in child support per week for five years and that this provision of child support it "nonmodifiable", it in fact is modifiable. If your divorce decree states that child support is reserved, it can be addressed any time.

In reality, the fact that you gave up 80% of marital assets and took 80% of marital debts will be considered if the custodial parent seeks child support in the above scenario, but child support will still be addressed based upon the best interests of the child standard. Therefore, maybe you will get a break, and be able to pay less child support than the statutory minimum, but there is no guarantee of this, and hence, such arrangements are bad bargains for the parent that would otherwise have an obligation to pay child support.

On the other hand, trading child support for maintenance may be a good deal all around. Child support has no tax consequences. This means that the paying parent cannot claim child support as an expense on his or her income tax return and the receiving parent does not claim it as income on his or her income tax return. This is exactly the opposite of maintenance (formerly known as "alimony"), which the paying spouse deducts from his or her gross income for tax filing purposes and the recipient spouse includes same in his or her gross income for tax filing purposes.

When maintenance and child support are lumped together, the payments are usually referred to as unallocated support or unallocated maintenance and the entire amount is treated as maintenance for income tax purposes. This might be a sizable benefit to each party, particularly if there is a large disparity between the parties' incomes. The higher earning paying parent, might be able to drop the equivalent of a couple tax brackets by deducting the entire unallocated support amount from his or her income for tax filing purposes, thereby hugely reducing income taxes, Federal and State. This in turn, means that he or she is left with a higher net income available to pay a higher amount of unallocated support to the other parent. As long as the other parents increased taxable income increases his or her income tax by less than the increased support received, everyone wins.

If should be noted, that currently in Illinois, as long as child support is included in the total support amount, the total support amount cannot be made nonmodifiable. This means that as in the previous discussion of child support, unallocated support is always modifiable, no matter what the divorce decree states. What happens when one wants to modify support, child support, maintenance or unallocated support will be covered in another Posting.

As you may have noticed from the discussion of unallocated support, child support need not be set at the minimum standards set forth in the section 505. The court can always order more than that statutory minimum, but in reality this rarely happens. There would have to be a great argument of high living standard established during the marriage, which is in the child's best interests to continue, coupled with a very large income earned by the non-custodial parent.

Conversely, it is also uncommon, to pay less than the statutory minimum, which is termed, "deviation from statutory guidelines". One way to achieve such a deviation is curiously one of the most helpful factors as to obtain higher than the minimum statutory child support: a very large income earned by the non-custodial parent. His or her income would typically need to be so high that giving the statutory percentage would result in a windfall to the custodial parent. This windfall must be real, and hence, must be above and beyond what could be used for the child.

Of course, a much higher income earned by the custodial parent than that earned by the non-custodial parent may also be reason to deviate downwards from the statutory minimum. Basically, if the child support would put the non-custodial parent into poverty and be almost completely unnoticed by the custodial parent, it could be set at an amount lower than the statutory minimum.

How do you pay/get child support? Child support could be paid (1) from the non-custodial parent's payroll through the Illinois State Disbursement Unit, he or she never touching the money, only seeing it a line-item on his or her pay stub, or (2) directly from the paying parent to the receiving parent. The former method is the default and will be ordered by the court short of the parties' agreement to do otherwise. This method is preferable to paying directly because it is more likely to be reliable and timely and the Disbursement Unit keeps official records of what is due and what has been paid.

As should be made apparent from the above, competent and imaginative counsel is central to achieving the right result when addressing issues of child support. Good negotiation skills and an open mind, willing to go beyond the statutory or other norms is key.

For a further discussion of custody, please read the Posting entitled, "Custody: Defined".

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