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Child Support
Whether you are a divorced parent or a never married parent of
a minor child, your child has a legal right to receive child support
from both parents. Under Illinois law, the non-custodial parent
is required to pay child support to the custodial parent. The Illinois
Marriage and Dissolution of Marriage Act provides guidelines to
calculate support obligations as follows:
- one child: 20% of net income
- two children: 28% of net income
- three children: 32% of net income
- four children: 40% of net income
- five children: 45% of net income
- six or more children: 50% of net income
Although the above percentages are guidelines, the Judge will only
deviate from these guidelines in rare cases. Child support is ALWAYS
modifiable. A child support order entered at the time of the divorce
is, almost definitely, going to be revised every couple of years
as the needs of the children change and as the income of the non
custodial parent fluctuates.
Child support is not only the provision of funds for food and clothing.
Child support is intended to provide funds for those things plus
housing, transportation, activities, medical care, etc. In addition,
to child support, the non-custodial parent is often required to
contribute additional funds for daycare, extracurricular activities,
private school expenses and medical expenses not covered by insurance.
A common misconception is that child support will not be paid if
the parties are awarded joint custody of the children. This is simply
not true. As a general statement, in cases where joint custody is
appropriate, one party will be designated as the residential parent.
As such, the child's legal address will be the same as the residential
parent. The other parent will be required to pay child support to
the residential parent. The right to child support belongs to the
child, and neither the parents nor the Court has the authority to
waive that right.
Child support is yet another area where needs grow and change.
Child support is often the subject of post decree litigation since
the children are entitled to an increase in support as the parent's
income increases. Conversely, if a parent's income decreases, a
decrease in child support may be appropriate.
Child support is not includible in the income of the receiving
spouse, nor deductible from the income of the payor. However, when
alimony and child support are being paid, it is possible to make
the entire amount income to the receiving spouse and deductible
for the payor. This is called unallocated family support and there
are strict IRS regulations governing its use. However, when unallocated
support is properly calculated it can result in more money for both
spouses. At Isabel M. Millard, PC, we always consider
every alternative to traditional child support and work closely
with our clients to create support arrangements that afford each
spouse the maximum benefit possible.
A comparison of: Child support plus alimony
and Unallocated family support.
The assumptions underlying this example are as follows:
- Husband earns $ 100,000 per year and is not self-employed.
- Wife is a full-time homemaker and does not earn any outside
income.
- 3 children, all under age 17, all residing with the Wife.
- Wife deducts $ 10,000 in mortgage interest and $ 4,000 in property
tax payments each year.
- Husband has no mortgage interest or property tax deductions.
(If Husband does have
similar deductions, it will only improve his cash flow).
- Statutory child support is 32% of the Husband's net income:
$ 21,869/year or $ 1,822/month. These payments are nondeductible
by Husband and not includible in Wife's income.
- Maintenance is $ 7,000/year or $ 583/month. These payments are
entirely deductible by Husband and entirely includible in Wife's
income.
*Unallocated support is $ 40,000/year or $ 3,333/month. These
payments are entirely deductible by Husband entirely includible
in Wife's income.
*How can Husband possibly afford to pay $ 3,333/month!? He
increases his exemptions. Call us to discuss unallocated support
in detail.
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Child support
...($ 1,822/mo.)
+ Maintenance
...($ 583/mo.) |
Unallocated Family
Support ($ 3,333/mo.) |
| Husband's after-tax cash |
$ 3,482/mo. |
$ 3,483/mo. |
| Wife's after-tax cash |
$ 2,406/mo. |
$ 3,146/mo. |
| Husband's % share of income |
59% |
52% |
| Wife's % share of income |
41% |
48% |
| Husband's marginal tax rate |
33% |
30% |
| Wife's marginal tax rate |
12.7% |
17.6% |
| Husband's total taxes paid |
$29,349 |
$18,921 |
| Wife's total taxes paid |
$ 0 |
$ 2,246 |
Net results of using unallocated family support:
No change in Husband's after-tax cash each month
Wife and children have $ 740 MORE after-tax cash each month
Husband's marginal tax rate is reduced 3% and Wife's marginal
tax rate is reduced 5%
Combined, Husband and Wife save $ 8,182 in taxes.
Contact us at Isabel M. Millard, PC to discuss support obligations in greater
detail.
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