Lower the income, lower the child support: Indiana Child Support Guidelines
With the waive of a wand your divorce attorney can magically adjust your income to lower your child support obligation ... with some long words, a little posturing and a legal technicality your attorney can make your child support go away!
Of course, this is not true, nor should it be. While the child support payor might like to underpay his/her obligation, this would be horrible for children. Yet, when faced with an obligation that looks too high the prospective payor will undoubtedly ask - what can we do to lower this? Usually, nothing. The numbers are the numbers, and for good reason the numbers are standardized and predictable. But the Indiana Child Support Guidelines do allow for a "magically" adjustment to account for the 21.88% tax factor on which the Guidelines are based:
In devising the Indiana Guidelines, an average tax factor of 21.88 percent was used to adjust the support column. Of course, taxes vary for different individuals. This is the case whether a gross or net income approach is used. Under the Indiana Guideline, where taxes vary significantly from the assumed rate of 21.88 percent, a trial court may choose to deviate from the guideline amount where the variance is substantiated by evidence at the support hearing.
When making this adjustment do you use the payor's effective tax rate or their tax bracket based on their income? A recent case answered this question as follows:
He asserts that his federal tax bracket is 28%, but the trial court found that his federal tax obligation, as a percentage of his income, was only 23.3%. The trial court was correct. The Child Support Guidelines speak in terms of tax rates, not tax brackets.
See this a previous post that explains how this adjustment can be used to adjust the income not only high earners, but also lower earners. Additionally, these adjustment can be made to either parent's incomes, not only the paying parent. Adjusting the non-paying parent's income could have a significant effect on the child support obligation.
For more on child support, including discussions on how the Indiana Child Support Guidelines were amended on January 1, 2010, and links to child support calculators, see our postings on child support.