June 2017 • Volume 105 • Number 6 • Page 12
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New income shares child support calculation method takes effect July 1
Heads up, family lawyers - beginning next month, Illinois will trade the percentage guideline child support formula for the income shares method used in the majority of states.
On July 1, 2017, a major change for calculating child support obligations takes effect. Last year, Public Act 99-764 was enacted. The legislation amended the Illinois Marriage and Dissolution of Marriage Act to replace the percentage guideline formula with the income shares model for calculating child support. This is a significant change that brings Illinois in line with 39 other states and the District of Columbia, which already use the income shares model. (For more about the new law, see p. 24.)
Based on actual child-rearing costs
Since 1984, Illinois has used the percentage guideline formula to determine child support. It arrives at the child support obligation by multiplying the payor's net income by a statutorily set percentage, which increases based on the number of children. This model is now considered outdated "because it does not reflect actual child rearing costs or allocate those costs between the parents." (See more in the December 2016 IBJ at http://bit.ly/2qYq8Rr). Rather, the old formula required payors to simply pay a percentage of their net income regardless of the actual child rearing costs. Oak Brook attorney Margaret A. Bennett believes the old model often caused acrimony between divorcing parents because it is not always perceived as equitable and accurate.
Bennett says that the perception of fairness in child support is important to getting buy-in from parents. The new income shares model is based on real data that takes factors into account other than just the income of one parent. It calculates child support using actual child-rearing costs that are based in part on data from the Bureau of Labor Statistics. The Illinois Department of Health and Family Services uses that data to publish its Schedule of Basic Child Support Obligation (the Schedule) (http://bit.ly/2pDO2wW). The schedule was updated on April 6, 2017 to reflect a recent increase in the cost of living, Bennett says.
The new computation is based on several factors. First, the net monthly income for each parent is determined. Income from all sources is included in the calculation. This means that if a party is receiving spousal maintenance, either from the divorcing spouse or a prior relationship, that amount is factored into net income. A party that pays maintenance from a prior relationship has that amount deducted from their net income. However, government benefits like Temporary Assistance for Needy Families, the Supplemental Nutritional Assistance Program, and SSI are not included as income.
The Act allows parties to use either of two different tax-based formulas to determine net income: a simplified standardized tax amount formula or an individualized tax amount formula. The standardized formula treats both parties as individual filers who claim one dependency exemption. A gross-to-net-income conversion chart can be found here: http://bit.ly/2pENHtM. The individualized formula considers the actual filing status of the parties, their dependency allocations, and tax credits. The parties can also agree to use a different formula so long as the court finds it to be conscionable.
Once the individual net monthly incomes are determined, they are added together. This combined income amount is then matched to its corresponding entry on the Schedule, which is based on the number of children from one to six. For example, if a divorcing couple has a combined adjusted monthly net income of $10,000 and only one child together, their basic support obligation for that child is $1,445 per month.
Once the basic support obligation is determined, the percentage contributions of each parent's income is determined. It is a simple calculation. The individual's monthly net income is divided by the combined monthly net income. Returning to our example, if the parties' combined monthly net income is $10,000 with one parent earning $2,500 and the other $7,500, their percentage contributions would be 25 and 75 percent, respectively.
The parent who has the majority of parenting time receives the support payment, which is calculated by multiplying the basic support obligation by the payor's income share. It is presumed that the payee will use their own percentage contribution to care for the child. In our example, if the parent earning $2,500 per month has the majority of parenting time, then he or she will receive $1,083.75 per month in child support (i.e., the other parent's 75 percent contribution multiplied by the $1,445 basic support obligation). That same parent will be presumed to spend his or her own percentage contribution to care for the child (i.e., $361.25 per month, which is 25 percent of the $1,445 basic support obligation). Bennett says that this increases the perception of fairness and equity in child support. Both parents' contributions to the support obligation are acknowledged.
Other factors can adjust the support obligation. Notably, when both parents have 146 or more parenting overnights a year, the shared parenting adjustment kicks in.
The shared parenting adjustment is a two-step calculation. First, the basic support obligation is multiplied by 1.5. This accounts for the increased child-rearing costs for both parents in a shared parenting situation. The parents' contributions are then determined. Those amounts are adjusted by the percentage of parenting time allocated to the other parent.
The Act still addresses everything it had addressed before, says Bennett. It adjusts based on whether a parent is incarcerated, whether the parties' income is at 70 percent of the federal poverty line, and whether one parent is underemployed, among others. She says that the Act should increase compliance with support orders and decrease acrimony between the parties.