Welcome to Ameritrade Plus University |
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Lessons:
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Child Support The amount of child support due from each party is determined by a strict formula that factors in each spouse's income and the average income in the area where they live. As the child's welfare is the primary concern, payments for child support are considered separately from alimony or property settlements, though an order for child support can be part of a divorce judgment. Aside from voluntary child support with direct payments between ex-spouses, child support is a function of family court, or as it's called in some states, domestic relations or divorce court. Traditionally, child support has been paid almost exclusively by the husband to the wife, for women would almost always get custody. However, more women are paying child support to their ex's these days, as more men are getting full custody of their children and joint-custody arrangements become more common. Until two years ago, the amounts of child support paid by people with the same incomes were all over the map, but a new federal law has changed this. The Welfare Reform Act of 1997 set up strict guidelines for payments. Individual states are required to incorporate these guidelines into their formulas for determining the amount of support. These state formulas vary with the cost of living in different parts of the country. To determine the amount of child support they would pay, residents of a given state may contact their department of human services (or similarly titled agency) to get a copy of the worksheet for calculating their net income and how to apply the state formula. (Note: This definition of net income is different from that used by the IRS.) The basis of the guidelines is the income-sharing concept, which factors in the proportion of disposable income that would normally have been spent on the children of an intact family. The purpose is to ensure that the children benefit from the standard of living of both parents, each of whom has a legal obligation to support them. Using gross income from both parents, and giving allowances for deductions for taxes and other mandatory payments such as union dues and medical insurance premiums, an available weekly income is established. The weekly child-support payment is then calculated using these guidelines, and the noncustodial parent's share is his or her assigned percentage of the sum of the two parents' net income. Some other points to bear in mind:
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