Welcome to Ameritrade Plus University
  Family Law
The details:

Top 10 things to know

Prenuptial agreements

Postnuptial agreements


Child support
Take the test
  Setting priorities
  Making a budget
  Basics of banking
  Basics of investing
  Investing in stocks
  Investing in bonds
  Buying a home
  Investing in mutual funds
  Controlling debt
  Employee stock options
  Saving for college
  Kids and money
  Planning for retirement
  Investing in IPOs
  Asset allocation
  Hiring financial help
  Health insurance
  Buying a car
  Home insurance
  Life insurance
  Futures and options
  Family law
  Estate planning
  Auto insurance

|> About Money 101

investing 101

  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:

  • If you are paying child support, always remember that good record-keeping is essential to prove what you've earned, in case your ex-spouse makes claims to the contrary. Your tax returns are the best evidence of your income.
  • If a man isn't married but there's a claim that he has fathered a child (or if the man is married and a woman other than his wife makes this claim), he should consider genetic DNA testing to resolve the issue.
  • For those who voluntarily agree to pay child support, it can be difficult to recoup any prior payments or to be released from the obligation to pay arrears, even for men who are later determined not to be child's biological father.
  • If you're paying child support and you're in arrears, try to pay something before you go to court on the matter, even if it's tough to come up with the money. Judges hate it when you make no effort to pay anything.
  • Should your financial circumstances change for the worse, get into court immediately to ask for a modification. These are rarely applied retroactively. Also, if you're the noncustodial parent, try to have your kids overnight at your place as much as possible; you can get a credit for this, since you're providing food and shelter for them during these visits.
  • Try to keep your payments current, as your wages are now subject to garnishment as a matter of course. And welfare reform has brought about other means of enforcement, such as revocation of professional and driver's licenses and liens on real estate.
  • And remember: The arm of the law has become longer because of computer technology used to track down child-support deadbeats. And failure to pay can subject the noncustodial parent to contempt-of-court procedures that may ultimately lead directly to the county jail.

Next: Take the quiz!

© 2003 Cable News Network LP, LLLP.