This article was written by Karen Webber, CPA, CFE & Kaitlin Accardi, CPA
If you are considering a divorce or have already been divorced, you mostly likely know that if you have a child(ren), either you or your spouse will likely be responsible for providing child support to other party. Many states cease child support requirements as of a child’s 18th birthday, but divorced parents in New York are required to continue support payment until age of 21.
There are two categories of child support in New York: Basic Child Support and Add-ons. Basic child support includes coverage of the child’s basic living expenses such as food, shelter, clothing, etc. Add-ons can cover any other expense paid for by either parent, from medical insurance to extracurriculars and education, as deemed appropriate by the courts.
Basic child support is calculated as a percentage of the parents’ combined income, increasing based on the number of children. Generally, child support is paid from the non-custodial parent in instances where the custodial parent has the child(ren) greater than 50% of the time. In situations of 50/50 split custody, the higher earning parent is considered the non-custodial parent and pays child support to the lower earning parent. It should be noted that combined parental income is capped at $163,000 as of March 1, 2022, however, the courts can also include amounts above the income cap they deem necessary.
Several types of income and wages should be considered when calculating child support. The most obvious incomes are wages, dividends and interest, business and investment income, and capital gains. However, other sources of incomes that should be included are cash benefits such as Workers’ Compensation, disability, Unemployment insurances, Social Security, and pension, retirement payments, or annuity payments. Other items that the courts could potentially include are certain employee fringe benefits or deductible business expenses that ultimately lower personal expenses for the non-custodial parent (i.e., personal use of company car, phone, housing, etc.). There are also items that should be deducted from total combined income including spousal maintenance, child support paid for other children, public assistance and supplemental security income, and certain taxes paid.
As noted above, the percentage of income used in the basic child support calculation is based on the number of children under 21 years of age and is as follows:
- 17% – one child
- 25% – two children
- 29% – three children
- 31% – four children
- 35%+ five or more children
Specific instructions for calculating child support can be found here: https://ww2.nycourts.gov/divorce/childsupport/index.shtml
It’s not uncommon for the custodial spouse to make a request to increase child support as time goes on. In New York, child support is calculated using the non-custodial spouse’s most recently filed tax return and can be increased as a non-custodial spouse’s income increases. Requester beware, though, that if the request is made and income in a particular year is lower, child support can be lowered as well.
Every divorce and financial situation is unique to a family’s circumstances. The Bonadio Group’s Fraud and Forensic Team can provide further analysis and support to help determine true income and obtain the funds necessary to care for children of divorced parents. Please do not hesitate to reach out to our trusted experts to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
