Child support: Why is it more than a simple math equation?

Colorado follows a guideline approach when calculating child support, but it involves more than plugging in numbers alone. The key is to make sure those numbers are correct.

The number of overnights and gross income are significant. But who will pay for health care insurance and how will out-of-pocket expense be divided? What about the ever increasing costs of day care in the Denver metro?

Numerous factors need to be considered when calculating child support. Your situation is unique and a formula approach can easily lead to errors.

What is gross income? Does it include overtime?

One of the first lines on the child support guidelines form asks for gross income. You need to know that the definition is broader than the one used for income taxes.

It may even include potential income if the other parent is underemployed. For example, a parent who leaves a successful career in finance to work seasonally preparing tax returns might be considered underemployed and income might be imputed (this amount is an estimate of what could be earned).

Salaries, wages, tips, commissions and bonuses can usually be figured out from a W-2 or past year tax return. But other types of income can easily be missed or may be more difficult to calculate, such as:

  • Workers’ compensation, unemployment or disability insurance benefits
  • Spousal support payments
  • Taxable distributions from a LLC or partnership
  • For self-employed parents it is gross receipts minus “ordinary and necessary expenses” (depreciation expenses or investment tax credits are not considered for child support)

Overtime is only included if it is required as a condition of employment.

Governmental assistance programs like Social Security Income (SSI) or Supplemental Nutrition Assistance Program (SNAP) and child support received for children from a previous relationship are not included.

Child care and health care expenses

If both you and the other parent work, child care is essential. Child and dependent care tax credits and age of the children must go into the analysis. Child care is usually only temporary, so consider what happens when these costs are no longer necessary.

Health insurance premiums, on the other hand, will often be required until a child can get his or her own policy. Review of your employer benefits and those of your ex- should be completed to determine which provides the most comprehensive benefits at the lowest rate. With higher deductibles on many plans, deciding the split on out-of-pocket costs and how they will be paid can avoid some future arguments.

When going through the process of separating households, a fair child support can mean the difference between covering the bills and going broke. Discuss your situation with one of the attorneys at Danielsen Westhoff. We are easy to work with and offer unbundled legal services when you only need help with document preparation or review.