child support 101/102 - The Gitlin Law Firm

we eliminated the effect of tax bracketing used in the federal income tax system. We
believe that eliminating this effect is equitable. Neither party should benefit or be
prejudiced by the artifice of considering certain income as falling into a certain
bracket. Moreover, in determining appropriate child support, we are not bound by the
technicalities of federal income tax law. See In re Marriage of McGowan, 265 Ill.
App. 3d 976, 979 (1994).”
This decision is a well-reasoned and complex decision. It points to the complex nature of proper
support calculations. The appellate court did not base the taxes on the highest marginal tax bracket
or on the lowest marginal tax bracket. Instead, it determined the overall effective tax bracket and
determined taxes on this basis. For a further discussion of this topic, see the outlines regarding tax
calculations in support cases.
B. Method of Calculating Net Income: Attached is a worksheet for calculation of net
income. This worksheet will let you know what to look for when you analyze net income
calculations offered by either party. Some judges use a tax program in chambers to determine net
income. An excellent program of this type is FinPlan, (800) 777-2108.
1. Gross Income: Determine the gross income.
2. Adjusted Gross Income: Determine the adjusted gross income by
subtracting adjustments from the gross income. The common adjustments
are maintenance payments and certain voluntarily retirement contributions.
One key issue is whether you allow maintenance to be an “above the line”
deduction (adjustment) in determining the adjusted gross income. Arguments
can be made on either side of this issue.
3. Itemized or Standard Deductions and Exemptions: From the adjusted
gross income, subtract the exemptions and the deductions. For final hearings,
assume the tax status following the divorce. Thus, if the child support payor
is awarded a residence and you know the amount of itemized deductions, use
itemized deductions. If itemized deductions are not known, then use the
standard deduction. Use the total number of exemptions that the payor will
be entitled to following the divorce. In post-decree proceedings use the
actual number of exemptions claimed by the payor.
4. Federal Tax Rate: Apply the tax chart to determine the federal tax. See my
attached 2007 Federal tax chart or determine this using a program such as
FinPlan.
Single Taxable Income
Rate
Head Household
Taxable Income
Rate
0-7,825 10% 0-11,200 10%
7,825-31,850 $782.50 + 15% over 11,200-42,650 $1,120 + 15% over 11,200
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