How Can Income and Other Financial Issues Affect Child Support?

 Posted on February 16, 2024 in Child Support

When parents choose to get a divorce, or in situations where unmarried parents are separated, they will need to address multiple issues related to their children. They will need to make decisions about how they will share parental responsibilities, create parenting time schedules, and make sure arrangements will be put in place to protect their children’s best interests. When creating a parenting plan and resolving issues related to child custody, parents will also need to make sure they both understand their child support obligations

Child support generally consists of financial payments made by one parent to the other for the benefit of their children. In Illinois, child support payments are determined based on a calculation that takes into account several factors, including the income of both parents. Understanding how child support is calculated, what factors may affect each parent’s obligations, and how to address complex financial concerns related to income and expenses is crucial in these cases.

At Weiss-Kunz & Oliver, LLC, our attorneys have a comprehensive knowledge of Illinois family law, including the issues that may have an impact on child support calculations. In addition to helping you resolve disputes related to child custody and take steps to protect your children’s health, safety, and well-being, we can make sure all financial factors will be considered correctly when creating child support orders. We will make sure you fully understand your rights and obligations, and we will help you put arrangements in place that will ensure that you and the other parent can work together to provide for your children’s needs.

Child Support Calculations in Illinois

The state of Illinois has adopted an “income shares” model for calculating child support. This means that both parents' incomes are taken into consideration when determining each parent’s obligations. Ideally, parents will work together to provide for their children’s needs, and their child support obligations will be based on the amount they would have spent to address various child-related expenses if they had remained together as married spouses or cohabitating partners.

The first step in calculating child support is determining each parent's net income. The income that may be considered includes wages, salaries, commissions, bonuses, overtime pay, rental property income, retirement benefits, Social Security benefits, income earned through a business, etc. Taxes and other deductions may be subtracted from each parent’s income to determine their net income

Once net incomes have been established for each parent, these amounts will be combined to determine their total combined net monthly income. This amount will be used to calculate the amount of child support that will be appropriate.

The following steps will be used to calculate parents’ child support obligations:

1. Determine the parents’ combined monthly net income.

2. Calculate each parent’s percentage of the combined net income by dividing each parent’s monthly net income by their combined monthly net income.

3. Determine a “basic child support obligation” using tables provided by the state of Illinois. These tables will provide an amount of child support that will be appropriate based on the parents’ combined net income and the number of children they have.

4. Multiply the basic child support obligation amount by each parent’s percentage share of their combined net income to determine their individual child support obligations.

As an example, consider a situation in which one parent earns $6,000 per month, and the other parent earns $4,000 per month, and the couple has three children. According to the tables used in Illinois family courts, the basic child support obligation for parents with a combined net income of $10,000 and three children is $2,830.

In this case, the parent who earns $6,000 per month would be responsible for 60 percent of the basic child support obligation, and the parent who earns $4,000 per month would be responsible for 40 percent of the obligation. That is, the first parent would have a child support obligation of $1,698 per month, and the other parent would have an obligation of $1,132 per month.

One parent will usually pay the amount of child support calculated using this method to the other parent. In most cases, the parent who has a majority of the parenting time with the couple’s children will receive child support payments from the other parent. While a child support obligation will be calculated for the parent who receives child support, they will be presumed to spend their obligation directly on meeting their children’s needs.

Shared Parenting Time

In situations where parents have equal or near-equal amounts of parenting time (often referred to as 50/50 custody or joint physical custody), child support obligations will need to reflect these arrangements. Because each parent will need to address various expenses to ensure that their children’s needs are being met, additional calculations will need to be performed to divide child support obligations correctly between the parents.

In cases involving “shared physical care” where children will stay overnight with each parent at least 146 days each year (40 percent of the time or more), the following method will be used to determine the parents’ child support obligations:

1. Determine a basic child support obligation for each parent using the method described above.

2. Multiply each parent’s basic child support obligation by 1.5 to account for the additional costs required to meet children’s ongoing, daily needs in each household.

3. Determine each parent’s percentage of parenting time per year by dividing their total number of overnight stays by 365.

4. Multiply each parent’s basic child support obligation by the other parent’s percentage of parenting time.

5. Offset the two amounts by subtracting the smaller amount from the larger amount. This will be the amount of child support that one parent will pay to the other each month.

Using the example discussed above, consider how child support would be calculated if the children will stay overnight 146 days each year with the parent who earns $6,000 per month. That parent’s basic child support obligation ($1,698) would be multiplied by 1.5, resulting in $2,547, and it would then be multiplied by the other parent’s percentage of parenting time (60 percent), resulting in $1,528.20. For the other parent, their basic child support obligation ($1,132) would be multiplied by 1.5, resulting in $1,698, and it would then be multiplied by the other parent’s percentage of parenting time (40 percent), resulting in $679.20.

Offsetting these two amounts by subtracting $679.20 from $1,528.20 results in $849. This is the amount that the parent who earns $6,000 each month would be required to pay to the other parent.

Additional Child-Related Expenses

The basic child support obligations determined using the methods described above are meant to provide for children’s basic needs. These payments may be used for food and other nutritional needs, clothing for children, and housing expenses, including rent, mortgage payments, or utilities. However, there are many other costs involved in raising children. To address these issues, additional expenses may be added to child support orders, including:

• Health insurance costs: The costs of providing healthcare coverage for children will typically be divided between parents. If one parent provides health insurance coverage for the children through an employer-sponsored plan or another source, the total amount they pay may be divided between the parents based on each parent’s percentage of the combined monthly income.

• Other medical expenses: Parents may need to pay additional costs to provide their children with medical, dental, or mental health care, and they may both be required to contribute to these expenses. If one parent pays for costs such as co-pays for doctor visits, medications, or counseling, the other parent may be required to reimburse them for a portion of these expenses. If necessary, payment plans for expenses related to orthodontic care or other types of treatment may be created to ensure that these costs will be shared by both parents in proportion to their individual incomes.

• Child care costs: While one or both parents are working, children may need to attend daycare or programs before and/or after school. Parents may also choose to use nannies or babysitters to provide care for their children while they are working. During summer vacations or other breaks from school, children may attend camps or other programs during the day. The costs of employment-related child care may be divided between parents based on their percentages of their combined income.

• Educational expenses: There are various fees and other costs that may be required when children are attending school or participating in educational programs. Parents will typically be required to divide enrollment fees and the costs of books or supplies. They may also need to decide how they will cover costs related to private school tuition, tutoring, or any other costs related to their children’s education.

• Extracurricular activities: Children will often participate in various types of activities, such as sports, music lessons, scouting, gymnastics, dance classes, or drama clubs. A couple’s parenting plan may detail how parents will share in the expenses related to these activities. Parents may be given the right to approve or disapprove of certain activities, and limits may be placed on the amount that each parent will be required to contribute each year.

Addressing Complex Financial Situations When Calculating Child Support

Calculating child support will involve a variety of complex factors, and in some cases, the types of income earned and other financial issues may complicate this issue further. Some issues that may affect the calculation of child support obligations include:

Self-Employed Parents

When a parent is self-employed, it is necessary to consider all sources of income. This includes not only wages they receive through a business they own or payments for services provided as an independent contractor, but also profits from business operations and any other forms of compensation. Calculating an accurate income for a self-employed person may require reviewing profit and loss statements, tax returns, bank statements, and other relevant financial documents.

Variable Income

In situations where a parent’s income fluctuates regularly, calculating child support can become more complicated. For example, a parent may be paid through sales commissions, or they may engage in seasonal employment, resulting in a different amount of income each month. In these cases, variations in income may be addressed by using an average amount of income a person earns over time. The court may review past tax returns and pay stubs over several years to determine an average monthly or yearly amount. This can help establish a baseline level of consistent support that reflects the varying nature of the parent’s income.

Multiple Sources of Income

When a parent earns money from multiple jobs or other sources of income, all of the wages or payments they receive will need to be considered when calculating child support. Besides wages or salaries they earn, additional income may come from investments, rental properties, or business ventures. In these cases, the court will assess all forms of compensation to establish an accurate picture of the parent’s financial resources. This might involve examining tax returns, bank statements, profit and loss statements for businesses, rental income records, and any other relevant documentation.

Deductions From Income

After establishing gross income figures for a parent who is self-employed or who has variable or multiple sources of income, certain deductions may be allowed before calculating child support obligations. These deductions help ensure that parents will have enough resources to meet their basic needs while still providing appropriate support for their children.

Common deductions include:

• Federal and state taxes

• Social Security and Medicare contributions

• Mandatory union dues

• Child support or spousal maintenance paid from a previous marriage or relationship

• Repayment of certain debts (typically excluding credit card debt)

• Expenses necessary to produce self-employment or business-related income

A close examination of financial records will be required to ensure that any deductions that a parent claims are necessary will be appropriate. This will ensure that the income and financial resources that will be available to provide for their children’s needs will be assessed correctly.

The Role of a Forensic Accountant

In child support cases involving self-employment, variable income, or substantial assets, a forensic accountant can provide valuable assistance. They will understand how to accurately assess all sources of income, applicable deductions, and other financial concerns. They can help uncover unreported income or other forms of financial deception by performing a comprehensive analysis and investigation.

A forensic accountant can utilize various methods during their investigation, including:

• Business valuation: In cases where a parent owns a business, a forensic accountant can determine the true value of the business and assess any unreported income associated with it. They will consider factors such as cash flow patterns, discrepancies in financial records, and hidden assets to determine the actual income a parent receives from their business and ensure that child support can be calculated correctly.

• Bank account and tax return analysis: By reviewing a parent's bank statements and tax information, a forensic accountant can identify any irregularities that may indicate that income has been misreported. They may also uncover additional sources of funds that may be put toward child support.

• Lifestyle analysis: By evaluating a parent's lifestyle compared to their reported earnings, a forensic accountant can determine whether there may be any unreported income or financial resources. They may analyze expenditures such as housing costs, vehicles, vacations, and entertainment expenses that may suggest that a parent has a higher income than was originally reported.

A skilled attorney who has experience representing parents in child support cases can work alongside a forensic accountant to present a compelling case backed by evidence. With a strong legal advocate on their side, a parent can navigate complex financial situations and ensure that all relevant factors are considered when determining child support obligations.

Contact Our DuPage County Child Support Attorneys

At Weiss-Kunz & Oliver, LLC, we can ensure that all financial factors will be addressed correctly as you establish child support obligations during a divorce or family law case. Our Elmhurst child support lawyers will help you establish arrangements that will meet your children’s needs while protecting your financial interests. Contact us at 312-605-4041 to arrange a consultation.