What is Child Support?
In almost all cases where there are children younger than 18, one parent pays child support to the other. Once ordered, child support generally continues until the child is 18 and has graduated from high school. If the child is at least 18 and is emancipated, married, in the military, not attending high school, or the child is attending high school but has already reached age 20, support stops.
On January 1, 2007, Minnesota implemented an entirely new system for calculating child support. Under the previous system, unless the parties had joint physical custody, the parent who did not have custody paid a certain percentage of their net income as child support. Under the new law, child support is calculated after looking at both parents’ gross incomes. In addition, adjustments may be made to the amount of child support based upon the parenting schedule, regardless of which parent has custody.
This is intended to be a brief overview of the new laws. However, you should speak with your attorney to determine exactly how it might apply in your situation. Under the new law, you must determine the gross income for both parents. Gross income means your income before any deductions for taxes, social security, insurance, 401K, flex plans or any other type of deduction. This number may usually be found in box 5 of your W-2 form. Next you add your gross income to the other parent’s gross income. You then take the total of your two incomes, convert the annual total into a monthly amount and apply that number to the new child support guidelines based upon the number of children that you have.
For example, if your gross monthly income is $3,000 and your spouse’s is $5,000, your combined monthly gross income is $8,000. You would then apply that number, and the number of children to the guidelines. The guidelines tell you what the total support should be for two parents with that combined gross income. With a combined gross income of $8,000, for one child the support would be $1,040,* for two children it is $1,688,* and it increases with the number of children to a maximum of six where the support would be $2,925.* If you have more than six children support will have to be calculated on a case-by-case basis. It is important to remember the resulting support number is not what one parent must pay to the other; it is the total cost to be divided between the two parents.
Note: *all of the dollar figures in this brochure are from the 2008 statute and are subject to change. They are provided here only as examples.
This brings us to the next step, which is determining how the support cost is to be shared between the parents. You start by calculating what portion of the combined gross income belongs to each parent. In the example given above, you are earning $3,000 and the other parent is earning $5,000 of the total combined income of $8,000. You can divide $3,000 into $8,000 and see that you are earning approximately 37% of the combined gross income. The other parent’s share is approximately 63%. Assuming you have one child as given in the example above, the total support is $1,040. Your share would be 37% of $1,040 or $385 and the other parent’s share would be $655. Usually the parent with the larger amount of parenting time receives the child support. So in this example you would receive $655 per month. These percentages are referred to as the PICS which stands for Parental Income for Determining Child Support.
These PICS are also used when determining how to share the cost of the children’s medical/dental insurance, non-insured medical costs and daycare expenses. Those topics are covered separately in this brochure.
There is a final step which is the Parenting Expense Adjustment. If either parent has a parenting schedule which comes to less than 10% of the time (generally you look at the number of overnights each year) then no adjustment is made. If one parent has parenting time of at least 10%, but less than 45.1%, there is a 12% adjustment. In the example given, the parent’s support obligation of $655 would be reduced by 12%, which leaves $577. If a parent has a parenting schedule of 45.1% or greater, the parents are presumed to have equal parenting time. This is a more complicated formula which your attorney can explain if your parenting schedule might fall into this category. It can have a significant impact on the amount of support, depending on each parent’s income.
The reason for the parenting expense adjustment is the recognition that the non-custodial parent will incur expenses for food, recreation, transportation and other household expenses while the child is in their care. It should be noted, that the parenting schedule which is used for this calculation is the one written in the court order, even if it is not the schedule you are following. If the schedule you are actually following is significantly different from that in the court order, you may wish to speak with your attorney about the pros and cons of seeking to have the order changed.
There are other adjustments sometimes made to a parent’s income which might affect the amount of support paid or received depending on the specific facts of your case. Some of those circumstances would include: spousal maintenance (alimony) to be paid or received in your current case; spousal maintenance paid or received by you or the other parent pursuant to a court order in an earlier file (for example from a previous divorce); child support paid by you or the other parent pursuant to a court order in a separate proceeding (child support which is received is not considered); and whether there are non-joint children (a biological child of one but not both parties) living in either parent’s home. Step-children living in the home do not affect child support. Your attorney will ask you questions to determine whether there are any adjustments to be made in your case.
Each family has its own unique set of facts and circumstances and this section is not intended to address all of them. Your attorney will take the time to discuss these with you. Very general answers are provided here for some of the more common questions. If any of these circumstances apply to your case, you should discuss them with your attorney.
Does having sole or joint physical custody affect my child support?
No. The same formulas are used when calculating support, regardless the custody designation.
What if one of the parents is self-employed?
The gross income of a self-employed individual would include all money received less the cost of goods which are sold and less general business expenses other than certain types of depreciation. This can be quite complicated and your attorney can explain how it might work in your case.
Are overtime earnings included?
If either party has regularly worked overtime prior to when the legal proceedings began, that overtime is generally included. If a party begins working overtime after the legal proceedings are commenced, it is not included.
Are bonuses and/or commissions considered?
Bonuses and commissions are generally included. However, there are various ways of addressing them.
What if one or both of the parents are seasonally employed?
Usually the person’s annual income would be converted to an overall monthly average.
Is the income of a parent’s new spouse considered?
Is there a maximum amount of child support?
If your combined monthly gross income exceeds $15,000, there is a cap on the amount of the support. However, there is not a cap when determining each party’s share (PICS) of the support amount. If one parent earns $5,000 per month and the other parent earns $45,000 per month, the child support amount is capped as if they earned $15,000, but the PICS will be based on actual income. So, in this example, the parent earning $5,000 is only earning 10% of the $50,000 total so they would be responsible for 10% of the support amount as calculated under the guidelines and the other would be responsible for 90%.
If we have more than one child, does support change when one of the children is emancipated?
Although parents can agree to such a provision, generally child support does not automatically change when a child is emancipated. When the last child becomes emancipated child support automatically stops.
May child support be changed?
Yes. As both parents’ incomes change over the years, it is possible to change the amount of support which you are paying or receiving. The most common reason for changing the amount of support is when one or both of the parents has a substantial increase or decrease in his or her income. In most cases, a cost of living adjustment (COLA) is made automatically every two years to keep pace with inflation.
Must the parents and the courts follow these guidelines?
Parents may not simply agree to waive child support. There will be rare cases where it might not be appropriate to strictly follow these guidelines. When this happens, the court must carefully explain why they are not following the guidelines.
What if one of the parents is unemployed?
A significant change in the new law is that you use a parent’s “Potential Income” if they are unemployed. Potential Income is the amount of income that a parent is believed to be capable of earning. There are exceptions if a parent is unable to work or if by agreement one of the parents has been a stay-at-home parent for the child for whom support is owed. It is somewhat unclear at this point how this new provision will be interpreted by the courts.
Finally, the new laws that went into effect in 2007 were the most significant changes made to the child support laws in Minnesota in several decades. Questions may arise which are not clearly answered by the written statutes. In these cases, we rely on the Minnesota Appellate Courts to interpret the laws. In addition, the state legislature will almost certainly continue to make minor changes to the laws. It is important that your attorney is familiar with the ongoing changes to the laws and how the appellate courts are interpreting those laws.
The State of Minnesota has created a website for lay persons to use in order to calculate child support. While this is a very useful site, it cannot consider all scenarios and it does not take the place of an attorney well acquainted with the law. The website is: http://childsupportcalculator.dhs.state.mn.us/
Does the parent paying child support have any control over how child support is spent?
No. Although this is sometimes a sore point between parents, the parent receiving support does not have to account for how the money is spent.
What if the parent obligated to pay child support does not pay it?
When a judge or child support magistrate orders the parent to pay child support that order is legally binding and can be enforced by the state in a variety of ways. In almost all cases, support is taken directly from the person’s paycheck through income withholding. Employers are required to ask new employees if they have been ordered to pay support. If a public agency becomes involved with the enforcement and collection of child support payments, not only will the parent continue to be liable for the delinquent payments, he or she can also be charged a service fee each month as the cost of agency enforcement. The state may also intercept a person’s state and federal tax refunds and apply them to the past-due support obligations.
If a parent gets behind in child support payments by a number of months, the state can suspend the delinquent parent’s driver’s license and any occupational license. Additionally, the state can have a lien placed on the delinquent person’s car, which means that anytime the car is sold or traded, the state has a right to receive payment from the proceeds of the car before monies or credits go to the owner of the car. Finally, the delinquent parent can also have his or her name published in the papers with the amount of money owed for child support, and if the failure to pay is willful, the parent could ultimately be sentenced to jail.
What is the “Expedited Child Support Process” in regard to child support?
The expedited child support process was developed for the child support issues that were traditionally decided by a judge in the district courts. There are three main reasons for developing the expedited child support process: (1) to allow individuals to set or adjust support without going before a judge and, hopefully, without an attorney, (2) to expedite the process of the hearings, and (3) to insure that the people hearing the cases were “experts” in that field. In the expedited child support process, the person appointed to hear the case is a magistrate familiar with all aspects of child support issues. The expedited child support process is used only when there are child support, medical support, or maintenance issues relating to the child. Thus, the expedited child support process cannot be used unless there is a child involved. It should be noted that the expedited child support process was not developed strictly for divorce cases. It is also used by people who are separated, or were never married, but need help with the support of their children.
The administrative process is not designed to decide any issue relating to which parent has custody, parenting schedules, property settlements between the parents, or charges of spouse or child abuse. Those issues must be resolved in the district court. The expedited child support process was designed only for the purpose of establishing, modifying, or enforcing child support, medical support, or maintenance orders when there are children involved.
Generally, the initial divorce proceedings occur in district court. At that time, the judge will decide issues relating to custody and the division of property. Once those initial decisions are made, the court may transfer the child support issues into the expedited child support process. For various reasons, the district court will often determine the amount of child support rather than transferring it to a child support magistrate.
One final thing about the expedited child support process. If the children are receiving any form of government services, such as food stamps or welfare, the county can intervene on behalf of the children and petition in the expedited child support process to seek monies from a delinquent parent or to increase the amount of support received by a parent, or to have the government paid back for services already provided that could have been provided by the parent with means to do so. Thus, if the government is providing any financial assistance for the welfare of a child, the government may have a voice in representing the interests of the child at all proceedings. This can cause confusion as there may be different courts (district and expedited process) addressing child support. If you or your spouse is receiving financial assistance from the government, be sure to tell us.
Can the amount of child support be changed?
As both parents’ incomes change over the years, it is possible to change the amount of child support which you are paying or receiving. The most common reason for changing the amount of support would be if the person who was paying the support (the obligor) has a substantial increase or decrease in his or her income. Although less common, it may be modified if the needs of the person receiving the payments (the obligee) had a substantial increase or decrease in his or her income or a substantial increase or decrease in his or her monthly expenses. Changing the amount of support may require the assistance of an attorney as you must go back before the court to explain why a change is appropriate. This requires the preparation of paperwork and at least one appearance by your attorney. As the cost can sometimes be substantial, you should discuss this with your attorney if you think a change might be appropriate in your case. As stated above, the expedited process was established with the hope that an attorney would not need to be involved. Whether to attempt to change support without an attorney is a decision you will have to make.
In most cases, a cost of living adjustment (COLA) is made to support automatically every two years to keep pace with inflation. COLA’s are only applied to the child support obligation and not to the cost of medical insurance or daycare expenses.
What if I’m ordered to pay child support and I lose my job?
Under Minnesota law, support arrearages are almost never forgiven. If you lose your job, but do not go back before the court or expedited child support process to change the monthly support which you are ordered to pay, you cannot later ask the court to forgive those amounts. Therefore, if you are ordered to pay support and you have a substantial change in your income, you should immediately go back before the court to have your support obligations lowered. Although it costs money to do this, it may be minimal compared to having a judgment entered against you for back support. Once again, if in the future you believe that your income has changed so that the amount you are paying should be reduced, you should act immediately.
Is child support tax deductible?
No. The person paying child support does not deduct the payments on their taxes and the person receiving the child support does not include it on their taxes.
Will my spouse or I be required to maintain medical insurance coverage?
Yes. In almost all cases, the court will require that the children be covered by medical and dental insurance. In most cases, the cost of the portion attributable to the child or children is shared between the parents according to their PICS as discussed under the child support sections. In the example provided in Section 15, one parent’s share of their combined gross income is 37 percent and the other parent’s share is 63 percent. Once the cost of the children’s insurance is determined, the first parent pays 37 percent of the cost and the other pays 63 percent. If the custodial parent is paying for the insurance, the non-custodial parent pays for their share of the insurance in addition to the child support. If the non-custodial parent is paying for the insurance, the custodial parent=s contribution is an offset to the support being paid by the non-custodial parent. For example, if the non-custodial parent pays $500 per month for support and the custodial parent owes $50 per month for insurance, the non-custodial parent pays $450 instead of $500. The child support is still set at $500, but the amount actually paid reflects the offset.
If the children are already covered by insurance, the court will order that this insurance be continued. If the children are not covered but a group plan is available to a parent through their employer or union, the court will order that the insurance be obtained. If it is available to both parents, they will have to decide what coverage to obtain or maintain, or, if they are unable to agree, the court will determine which coverage is best. If the children are receiving coverage through the government (Minnesota Care or Medical Assistance), the non-custodial parent will be ordered to pay a portion of that cost. Both parents should have a current copy of a summary of the insurance plan’s benefits and copies of current insurance cards. There are many other requirements as to what coverage is acceptable and when the cost is shared or when it is not shared. Your attorney can explain this to you in more detail.
How are non-insured medical expenses for the children paid?
The cost of medical and dental expenses which are not paid through insurance are shared between the parties. This applies to co-pays, deductibles, non-insured expenses, glasses and orthodontia (braces). As with the cost of insurance, they are shared according to the PICS number. If you have 37 percent of the combined gross income you would pay 37 percent of these costs.
Although many parents agree on how best to handle these expenses, the law also sets out how it is done. In order to be reimbursed, the request must be made within two years of the date the expense was incurred. The request for reimbursement must be made in writing and must include copies of bills and receipts. The person who receives the request has 30 days to pay the bills, or reimburse the parent who did, or to file a motion contesting the amount claimed. If the obligated person does not contest the charges and does not bring a motion challenging the amount claimed, child support enforcement will enforce the claim through income withholding. Although most parents work through these expenses easily, there are many detailed requirements set out in the law. This is only a brief overview and your attorney can explain it in more detail.
Who pays for daycare expenses?
The cost of work or school-related daycare costs are shared by the parents. Unless you and your spouse agree otherwise, you will share daycare expenses according to the PICS number. If you have 37 percent of the combined gross income, you would pay 37 percent and your spouse would pay 63 percent of these costs. However, because the parent paying for daycare often receives a state and federal tax credit, you must first find out what daycare actually costs after the tax credits. The Minnesota Department of Human Services prepares tables which show the amount of the tax credit. The child support calculator available online automatically takes the tax credit into account when calculating each parent’s share of daycare expenses. Your attorney may have other software which can also calculate the tax credit when determining the amount of the daycare contribution. If the daycare expenses vary, for example, if they are higher in the summertime when school is out, you must determine the average monthly cost for the entire year.
Although daycare contributions are a part of the child support obligation (COLA), they are not subject to Cost of Living Adjustments. In addition, these contributions are limited to daycare expenses which are incurred in order to allow the custodial parent to work or to attend school. Daycare contributions also end when the daycare expenses end. If the custodial parent notifies the public authority assisting with child support that the expenses have ended, the payments will be suspended. If the non-custodial parent notifies the public authority that daycare has ended, the public authority will verify that with the custodial parent. If the parents disagree as to whether the child is still in daycare, either party will have to bring a motion asking the court to determine the true facts. This is an overview of the law and your attorney can explain it in more detail as well as how it might apply to your particular case.
One final note to consider is that the non-custodial parent may be able to have the children with them instead of in daycare while the custodial parent works or attends school. Whether this is a good idea depends on the facts in your case. While this reduces the daycare costs for both parents, it is not a reason to increase or decrease child support.
Will we have to obtain or maintain our life insurance?
Sometimes it is agreed that the parties will obtain life insurance on themselves, naming the children as beneficiaries. This is done so that the children will be taken care of financially should either the custodial or non-custodial parent die. Sometimes a party is required to continue naming his or her ex-spouse as a beneficiary under life insurance policies. If you have life insurance policies on yourself or your spouse, you should discuss this with your attorney. It is important that you follow up on this after the divorce and make sure insurance is obtained and the premiums kept up to date. If the premiums are not paid, the insurance will not pay, even though your spouse was ordered to keep insurance in force. Likewise, if your spouse is no longer going to receive the proceeds from your life insurance policies, you must follow up after the divorce to ensure that their name is removed. A change in the beneficiary is not effective until this has been done.
Who can claim our children as exemptions on our tax returns?
Under federal and Minnesota law, the custodial parent is generally entitled to claim the children as tax exemptions. However, it is very common to have an agreement that the non-custodial parent is allowed to claim one or more of the children as exemptions. The court may also order which parent may claim a child as an exemption. One way of claiming the children is for the custodial parent to fill out an IRS form stating that the other parent is entitled to claim the children for that year. Or the divorce decree can say which parent may claim a child. Unless this is put into the Marital Termination Agreement and/or Court Order, the non-custodial parent may not claim the children as exemptions. Whether or not the custodial parent wants to agree to this or whether the court will order it depends on many factors which your attorney can explain to you. In most cases, if both parents work and if support is being paid, the exemptions are shared.