How much is child support in California? What is child support intended to cover? What are child support add-ons? When does child support end? Are there any official California child support guidlines?
These are just a handful of the most common questions about how child support works in California. And chances are you probably have similar questions.
Although California has established guidelines for calculating child support, there are still a number of factors that can impact the amount of child support.
I sat down with Certified Family Law Specialist Dayn Holstrom to discuss the California child support guidelines and help you understand the ins and outs of child support in California.
Let’s dive in…
Understanding Child Support in California
How does child support work in California?
Dayn Holstrom: The gist of the child support laws of California states that it is the responsibility of both the non-custodial and custodial parents to provide support to their minor children. That’s the general statement of public policy.
When it gets down to the actual implementation of that policy, the legislature has established a formula that is referred to as the Guideline. In the early days, pre-computers and complex software, it was a book that was about two inches thick and you’d have to find all the right permutations to plug into each case.
Since that time, it’s been changed and modified to where now the Guideline supports calculations contained in several competing software programs that have been accepted by the California Judicial Council has accepted for use in the courtrooms to calculate child support.
The two primary child support calculator programs are DissoMaster and Xspouse. Both are very cleverly named, and they use largely the same formula to calculate child support. If you input the same numbers to one, you should get within a dollar or two of the same numbers resulting from either one.
They allow for very complex calculations regarding child support orders. But the simplest calculation is that the determination of child support is predicated upon two primary factors.
Child Support Guidelines
What are the primary child support factors?
The first factor takes into account the relative income of each spouse, the non0custodial and custodial parent. One we’ll call the payor, and the other we’ll call the payee. We don’t always know who that’s going to be until we run the calculation.
The second is that relative timeshare. Timeshare is divided up and characterized as percentages.
For example, “What is my timeshare? Is it 35 percent or 40 percent?” And leaving aside the custody issues, if somebody slams their fist on the table and says, “I want my 50-50.”
Essentially, that means cutting the visitation with the child in half, it’s a calculation.
So if both parents make the same exact amount of money and if, in fact, they share a child for the same amount of time, the child support calculator will give you a zero number.
The more either one of those changes, the more that the amount of child support will change. For example, let’s say the father’s income is $10,000 and the mother’s income is $2,000, and they have a 50-50 timeshare, the father is going to be paying the mother a reasonably significant amount of child support.
How would timeshare influence this amount?
If that father’s timeshare, instead of being 50 percent, goes down to say 20 percent instead of 50 percent and he has a higher income than we noted, then the husband’s amount of child support will go up dramatically.
The further away from a 50-50 percentage and the further the disparity between relative incomes, the more likely it is that the child support payments will increase.
When calculating child support payment options, we also have to look at the effect on multiple children. Along with the child support calculator, California child support guidelines will first create an amount for one child. If there is more than one child from the parent’s relationship then the guidelines had been created in such a way so that when child support stops for the first child, typically we’ll talk about the age of the second child.
What happens is the amount of child support that is assigned for the second child, even if that child is only two years old, will automatically be the correct amount based upon the guidelines when that first child ages out.
By way of illustration, the first child’s support might be $1,100, the second child’s amount will not be the same amount, which is the way it used to be. It might be $750, depending on the way it is weighted. The state weights it so that the higher amount goes to the younger child. And that’s because support for one child on a per-child basis, is the most, and then per child, it gets lower.
If you extend that thinking out further, say if there are four children to consider, the youngest child support amount might be $1100, the second child might be $800, the third child might be $500, and then the oldest child might be $300. That’s the dynamics of how that works.
So that when each child ages out in succession, if nobody’s ever gone to court to modify it, that’s how the amount of child support is scaled for each child.
When Does Child Support End
And this continues until the age of majority?
Correct. Support takes place until a child reaches the age of majority in California.
What is the age of majority in California?
Until the child is 18 and no longer a full-time high school student and residing at home, or a full-time school student. There are grey areas such as the age of majority is not when the child hits 18 – usually that’s the most common one. If a child turns 18 on May 20th and graduates from high school on June 1st, child support stops June 1st. But I do see complex instances when we get a child that is 18 and out of high school but it’s going part-time to some kind of completion program.
What other types of complications do you see in child support issues?
Sometimes the parent’s income is linked to what is called a hardship deduction. For example, suppose there is a stepchild that is in the home of a husband and new wife, and the husband is paying child support for a prior relationship. In that case the tax deduction or credit or offset because the tax laws have all changed now belongs to the husband of the first relationship even though this child is not his. That, in effect, gives him more disposable income, which can increase his child support amount in the first relationship.
Very often, these things were more true under the old tax law, but they still are to some degree under new tax laws in California.
There are two very strange dichotomies that have occurred. In one, a divorced parent goes out and buys a new home with a very high mortgage. The higher the mortgage causes him to think, “Gee whiz, your child support is going to be less if you have less money.”
Except that the opposite is true. Because the mortgage is largely tax-deductible, it is subject to limitations. The higher your mortgage, the more child support you pay because you have more net spendable income after tax.
Conversely, a husband marries a wife and wants to argue to suppress the wife’s income before disclosing it to the other side or to the court, and you point out to the husband, “Well, that’s fine.”
Getting past all the ethical issues of, “No, we don’t do that.” You try to make it their decision, and you point out to them in actuality because you’re planning on filing joint taxes, the higher your new spouse’s income is, the lower your child support is going to be.
And why is that?
Because the California law says two things at the same time. One, we will not count your new spouse’s income for the purposes of child support. Two, we will consider your actual tax consequences of failing to figure out what your net spendable income is. The net effect of both of those is the result that I gave you.
So the hardship expense side of child support is this. Let’s say there are four children from that father and mother, and they are sharing those children on an individual basis, and they’ve come up with a child support calculation. But then, the father now has a new child from another relationship.
One of two things can happens. First, the father has a legal financial obligation to support his children at birth, whether he is separated from the mother of that child or not. So, although he can go to court and seek a hardship deduction from his income for some or all of the costs to support this new child, that is not always guaranteed.
Why is it not guaranteed?
Let’s say the husband makes $20,000 a month and the cost to support this child is $1,000 a month. His new spouse makes $20,000 a month as well. You’re going to lose that hardship argument.
Conversely, when a father who is a payor makes $3,000 a month. Suppose his new spouse doesn’t work at all, and he basically has to live in a trailer or in the back of a station wagon to be able to pay to his obligated child support. In that case, that person is more likely to get a hardship deduction for the half-child and half-sibling, which are differentiated from the step-sibling. You get no benefit for supporting a stepchild, period.
Income Available for Child Support
What is considered income for child support purposes in California?
Pretty much everything. But there are some exceptions.
First, the most common and obvious income is W-2 income. That’s income from a paycheck.
Second, any income from the business of any kind.
Third, any interest income.
And the most common new one that’s really been enforced in the last ten years is any recurring foreseeable gifts from family, relatives, friends, and so forth. That’s a biggie. Because if grandma and grandpa are paying $5,000 a month to help out, guess what? The court’s going to count that as income available for child support.
That becomes a real sticky issue at trial because it is easy for that grandma and grandma’s to suddenly say, “I’m not doing it anymore.” And the court is left to decide whether, “I believe you or not.”
Does it matter if it’s just received to be used on a discretionary basis versus if it’s used towards paying expenses? For example, paying kids tuition, or paying many different types of things along those lines.
The answer is it may, but that depends on the mechanics of it.
In other words, if the money is given to the payor, I don’t care if you say it’s for a purpose, they have the discretion of what they’re going to do with it. In my mind, you’re going to lose the argument that, “It’s really not my money.”
Conversely, if grandma and grandpa pay for a private school, that’s very different. I think your argument is, “I’m not receiving that money. That is not money that I don’t have any discretion of what to do with at all.”
The mechanics of that become very important.
But if grandma and grandpa pay for housing and they have a house, a rental, and they kicked their tenant out and moved their daughter in, does that count as income for the daughter? That also is an arguable situation. In my mind it does, but then it requires you to provide proof of the fair market rental value of the property, and so forth.
All of those can be included as a parent’s income and as discretionary but some are far stronger than others, in terms of what’s included in the California child support calculator.
And there’s a variety of other things that can count as a parent’s income in the California child support calculator. If you’re a real estate investor and you flip houses, guess what? It’s very likely the court will consider the income that you’re making from flipping houses as income, because that really is your business.
However, can the California court consider restricted stock options? Almost invariably. What about if you’ve got stock options, which is not a restricted stock unit, but it’s restricted stock options. But the stock options strike price says that you shouldn’t exercise it. We’ll know because there’s no profit available.
But if you are holding matured stock options that you are choosing not to exercise, guess what? The court could easily and should count that as the parent’s income even though you haven’t realized it. That goes into the area of imputation of income, which can happen in a number of ways.
Are capital gains something that’s usually included as well or is that kind of a one general carve-out to the all types of income?
I think capital gains are generally seen as a separate issue. Why? Because it’s not a recurring source that goes back to the gift of the family.
Supposing your family in 2018 gave you a $100,000 gift, and that was it. Never been anything before, never been anything after. I don’t see the court counting that income.
It’s the idea that it’s recurring and available. Why? Because what we’re trying to figure out is the cash available for future child support to improve and maintain the child’s standard of living. That’s the entire basis of the calculation.
And if you remember that, then you think, “Well, is it likely to contribute income in the future?” And you say “yes,” then you need to count it. If you say “no,” then don’t.
That’s the same thing capital gain falls into. You sold the property you have for 30 years, you don’t have 30 of them you’re looking to sell, so then the answer is no.
Child Support Bonus Table
How is child support calculated for overtime, bonus income, anything that’s kind of differentiating between maybe base versus bonus or Ostler-Smith type of support?
The answer to that is if they do their base calculation, I always argue for a client based upon on the circumstances where the payor or the payee is. If I am the payee on that side, I argue the lowest minimum common denominator.
In other words, you may have mandatory overtime. And they also have discretionary overtime. In my mind, we would count the salary and the mandatory overtime even though it’s overtime. Why? Because it’s recurring.
You’ll know they will never ever get below that. So rather than just say, “I’m going to use salary.” That’s the most common go-to answer. The better answer is the lowest common denominator of the income.
That becomes your base child support calculation.
With that floor, you need to be careful if somebody gets paid bi-weekly and it throws you that third paycheck in twice a year. Because if you don’t write the language carefully, you’re going to really hurt your client.
Without that situation, they then create the percentage based upon both of those programs I mentioned.
Support order calculations are based on a bonus annually or monthly, in terms of what the percentage should be. The percentages only vary by literally tenths of a percent over tens of thousands of dollars per year. So it’s really kind of a no harm, no foul if you find at 6.3% it should have been 6.4%.
Keep in mind that these formulas are based upon a percentage of gross income, not net income.
That means the payee can’t do creative things like contributing more voluntary money to retirement or claiming fewer deductions to try to avoid paying child support in California. Based on all of those factors, the percentage comes out on the amount above the minimal sustainable gross monthly income and is paid on top of that. That is how it’s typically done for bonuses, and it’s how it’s typically done for overtime.
And the bonus percentages are designed such that the amount paid according to a bonus table corresponds precisely with the amount if it was put into the base child support guideline.
Yes. You’re always retrospective when you do that, and you don’t know what the numbers are going to be, but the concept is that if they get no bonus or no overtime then you are getting the presumptively correct amount for support.
And if they do get a bonus and you’ve calculated the percentages correctly, then no matter what amount of bonus that they get, you will arrive at the same amount. The true statement is very close to that.
But if you project, for instance, a $20,000 bonus and they get a $100,000 bonus, then it’s going to be the wrong amount because the Guideline software table changes the percentage.
It’s frankly unmanageable in my mind to create an order that says that you get the percentage according to the table that is hereby attached to a paragraph or appendix 17. Because now you’re attaching a 20-page table to your child support order to wait to see what happens to determine what you should have gotten paid before it happened.
Which, is in my mind, is a non-issue if it doesn’t work. It’s far better to just come up with a middle tier. If you’re 6.2 on the low end, 6.5 on the high end, you shake hands and call 6.3 or 6.4, and you’re done. The answer is close to what you said, but not always.
Child Support When A Parent is Self-Employed
How does child support work when a spouse is self-employed?
Well, the first question comes to enforcement, which is a whole separate issue. It’s definitely a more challenging issue to enforce because you cannot use typically use what’s called a wage assignment. This is the most common and everyday use device to collect support out of somebody’s paycheck before they actually receive it and have a chance to spend it on something else.
Other than enforcement, you have issues that may be conducting forensics on an account depending on the amount of income and things like that.
With determining the accuracy of a parent’s reported income the first thing you do is you start with what they admitted their income is.
And then it goes from there.
The first one is the personal expenses that they’re disguising as business expenses, which virtually every business person does to some degree or another. And we’re not talking about major tax fraud, we’re just talking about, “Am I going to put my car in the name of the business?” Who pays for my cell phone? Does the business pay for my health insurance? These factors matter to you when you calculate child support in California.
So these are potentially legitimate deductions?
They’re very legitimate business deductions. But for business deduction impacts, the most obvious one is depreciation. In my mind, I think this is oversimplified by a lot of family law attorneys and judges. Most family law attorneys in California will say, “You just add back depreciation.”
I don’t agree with that because what it presupposes is that you never have to replace capital assets. Therefore, that’s an unreasonable position to take if you have a capital-intensive business.
I have a client whose business is based upon heavy machinery rental and leasing. And guess what?
You’ve got to keep buying new equipment, and if you keep buying new equipment, then you’re not going to count the capital investment as an expense. You’re not going to count depreciation. He’s being mistreated, he’s getting dinged on both ends.
You must take it either way. If a business person who happens to be an attorney is writing off their desks and chairs and everything else as a purchase under say Internal Revenue Service Code Section 179, which is extremely common, they expense it rather than depreciate it by taking the accelerated depreciation up to certain limits again. Then you can’t say, “Well, we have to add that back out.” What might be reasonable is getting an accountant to say, “Well, let’s apportion that.”
Say the average life of your desk and your chair will be three to five years, and therefore we’re going to give you depreciation for that. Many family law judges and commissioners don’t necessarily understand it because they’ve never been in business.
And all they hear is depreciated, and you just add it back. I think a better recent approach is to look at how real the depreciation versus expense calculation is done to make sure it makes sense for this particular pay over. But then there’s the other bad batch with the absolute fake ones.
By that, I mean the cash received but not reported, personal expenses paid with company credit cards. All of those things are completely separate and all of those get added back.
Candidly, for those you generally need an accountant. Why? Because if you’re an attorney and you’re charging anywhere from $300 or $1,000 an hour and you’re doing spreadsheets, you’re under-utilizing your time and overcharging your client.
The bottom line is that if someone is self-employed, chances are you will have a lot more complexity to the divorce situations.
Generally speaking. I mean, we’re throwing all self-employed people in a broad scenario. A real estate salesperson, not so much. They’ll still get creative with their marketing expenses and their cell phone use and their mileage, but that’s it.
Normally their splits with the rover are well documented, easy to figure out. But yes, if someone is running a complex business with many employees and a lot of expenses and higher revenues, the more complex it’s going to become.
Calculating Timeshare (Child Custody Percentage)
How is the child custody timeshare percentage calculated?
You start with the fact that there are 8,760 hours in a year and go from there. Some judges don’t do that, and I think it’s not fair. I think it’s a disservice.
When I do it, and when there’s a contested calculation, I do it in such a way as to break it out.
People often make the mistake of saying, “Okay, well, if we’re going every other weekend say, for Friday at 5 pm or Sunday at 6 pm.” That’s only an example and I don’t want to suggest that’s normal. But that’s easy to calculate.
It’s 40 hours a weekend, 26 weekends a year, right? Do the math. That’s what it is, 1040 hours. But what if we now give that person two weeks vacation in the summer? Okay. We’re adding two weeks of vacation, which is 14 days at 24 hours. Right?
Because we already counted at least one of those weekends in our previous calculation. So you have to make sure that you subtract while you are adding. And there are some of these software programs that I talked to you about, they have pre-configured tables where you can say what the child custody timeshare for this calculation is, and those are, in fact, accurate.
But every time you change a pick-up time or a drop-off time or add a dinner visit, it changes. And so the answer should be that it’s based upon hours. Clients often will come in and say, “Well, I have this child five days a week. Therefore I have five sevens of the child’s custody time.”
“Okay, talk to me about the schedule.”
“Oh, well, I get him for Friday night, overnight to Saturday night. And then I get him Monday evening for two hours, and I get him Tuesday evening for two hours. Wednesday night, I get him overnight and Thursday morning, and then Friday I get him for two hours.”
The first description you gave me was five sevenths which is going to be like a 70% timeshare. I’m ball-parking in my head here. And the next one you gave me is a sub 20% timeshare. And so you’ve got to use hours. You cannot use days or portions of days because you will get an invalid number of over-simplification to that.
And it brings up new questions.
“Okay, well, what happens if I drop them off at school and they pick them up from school?” And the answer is, “As long as you’re consistent, you’ll come out with the reasoned approach.”
I don’t care if you cut the school time in half. I don’t care if you give credit to whoever drops off but now who picks up. As long as you do it the same both ways. And that’s the best way to resolve that.
California Child Support: Basic vs. Add-Ons
What is basic child support intended to cover?
Virtually everything that is, “normal,” except for what are called mandatory add-ons and discretionary add-ons.
What are the mandatory child support add-ons?
There are a few. For example, the above base support daycare, reasonably necessary for a parent to work or to go to school. And that latter one should be used more often than it is. The idea behind going to school is not to get a course in underwater basket weaving – it’s to be able to get an education to earn a higher income, which will then better contribute to the support of the children, improve their standard of living, and secure the parent’s financial situation. That’s the key.
Another child support add-on is any health insurance. Health insurance is a mandatory obligation as opposed to an add-on support. Meaning if you’re eligible for health insurance at reasonable monthly costs and they’ve just recently changed the statute. But this means a reasonable or low cost or union affiliation in employment, et cetera, then you will be ordered to put that child on your health insurance.
Now, can you get a deviation, particularly where that child is covered by both parents and one parent’s insurance policy is free and the other one costs $1,000? Yes, I think that’s reasonable and fair to go to court and explain that to a judge, and say, “Well, it’s silly to increase that expense.”
One child support add-ons include uncovered medical and dental expenses. But these have to be identified as what they are, which is medical, dental, psychological, orthodontia, prescription medications, all of those kinds of things. If properly listed, they are mandatory add-ons to the basic child support.
What about extracurricular activities?
That is a discretionary child support add-on. I love it when parents are basically able to just work that out and say, “Hey, we both agree that Johnny should be in soccer. So let’s split the cost and split responsibility for getting Johnny or his sister back and forth to soccer practice.” “Okay, cool.”
That is co-parenting at it’s finest without getting the court or a judge involved, and that’s what should be done. But if parents can’t do that, and where we often see that there’s most adversity or adversarial contact is when one parent says, “I want to put Johnny in soccer.” And the other parent says, “Well. No, I want to put Johnny in baseball or dance.” Or whatever.
When they disagree and one parent says, “Screw it. I’m putting Johnny in soccer.” The other parent is going to be less willing to contribute, and the court is going will be frankly less likely to include it.
Why? Because most custody arrangements have something that says neither parents shall enroll a child in an extracurricular activity without the consent of the other parent if that time of that activity is going to impose on that parent’s schedule.
In other words, it’s not just, “Do I have to take Johnny to practice?” It’s, “Do I have to give up my custodial time for Johnny to be at practice?”
Again, I advise co-parenting one on one, “Figure it out, guys. Do what’s right for your child, for their necessary development. Do not be selfish with “your time.” It is Johnny’s time with you. Not your time with Johnny. And if you remember that perspective, you’ll do the right thing.”
Is is it fair to say discretionary add-ons are then shared by mutual agreement? And if they are shared for discretionary or mandatory, is that generally 50-50 or is that on a proportional basis?
In the case of mandatory child support add-ons, the guideline says they should be shared. It doesn’t say 50-50. And in very few cases do I see a court deviate from 50-50. But I love it when attorneys creatively argue, “Your honor, the net spendable level does not merit the support of the payor.”
That’s one of the things you can figure out when you look at child support calculation, it shows how much money is left after they pay the taxes and or pay or receive basic child support.
If things change and the payee suddenly has $1,000 net spendable more than the payor, then should the payor necessarily pay half? Not necessarily.
What if the payor’s net spendable income is $10,000? Then why should the payee pay half, if there’s that huge disparity? So the answer is, the court has the ability, to make it not 50-50. But the default knee-jerk reaction is 50-50 for mandatory child support add-ons in California.
Discretionary is not always by agreement. It can be. Or it can be by a court order.
For instance, Johnny has a learning disability and Johnny has been recommended to have a tutor. Well, that’s not a medical expense. So it’s not a mandatory. Is it likely the court would order both the non-custodial and custodial parent to share the cost of Johnny’s tutoring sessions as soon as they had a recommendation?
There’s a discretionary add-on that the court would likely order. Similar to that, if Johnny doesn’t have special needs, but he’s just really struggling and could benefit from a tutor, maybe.
What about private school costs?
Private school is a potential discretionary child support add-on. But it is far less likely to succeed unless children have been in private school for the last several years. Say the kids are going into their senior year when mom and dad separate, are we going to keep them in private school? Yes, we’re probably going to do that, it’s a fair solution.
But the other extreme is if this child is five years old and was in a private daycare, but now we want him to be in private school for the rest of their life. No, I think it’s much harder to justify that.
And parents do many things like bring up the scores of the public schools and things like that. Now we get into a custody battle and mom says, “Well, fine, I’ll just take the kids with me for more time and put them in a public school by my house.”
The answer is private schools are a much harder sell unless there’s so much excess discretionary income that it makes sense for the children’s well-being and standard of living to do with the lifestyle of the parents.
California child support guidelines say there’s not a limit on what can be a discretionary add-on based upon the lifestyle of the parents. And in high earners it is very common for a court to say, “You know what? I’m going to order you to pay for the house payment and child support.” And that’s because it’s part of a parent’s lifestyle decision.
Child Support and Taxes
Is child support taxable?
No, child support is not taxable. It is non-taxable to the recipient and nondeductible by the payor.
Deviating from Guideline Child Support Guidelines
Is the court required to follow the child support guideline amount? If not, in what instances is the court allowed to deviate from guidelines?
There are a small number of judicial officers that will deviate from California child support guidelines. The short answer is, technically, yes, the court can deviate. The law says that the child support guideline amount is presumptively correct, and the gist of the tests is this, no court has ever been reversed for following the guidelines.
If you deviate from the guideline, your likelihood of reversal goes up dramatically.
Why? If you say, “Well, I don’t think that the custodial parent really needs this much money based upon their standard of living.”
That’s wrong, and it’s not fair. Okay? The idea is to try to provide available money to try to normalize the standard of living of the child and provide them with financial stability. The best, best case on this is the prior case.
There’s a completely different scenario. And I thought that was a complex case that deviated from child support guidelines for an incredibly well-reasoned analysis.
That case involved Jon Cryer, the actor on Two and a Half Men who makes a ton of money. Well over a million dollars a year. Unfortunately, the mother of the child had ongoing mental health, drug problems, and so forth.
That child was placed in Jon Cryer’s sole custody because she was in rehab or something to that effect. And of course, Jon Cryer’s attorney wisely ran back into court and said, “Your honor, my client’s paying $20,000 a month as support. There’s really no reason to do this.”
He has 100 percent timeshare. And if you have 100 percent timeshare based upon the description they gave you, and how the child support calculator works, the child support amount should be zero support, right?
My guess is that would be a wrong assumption?
That’s correct. That was the presumptively correct guideline, but what the judge said was, “Well, here’s the problem. Your thought process is flawed. We all hope mom’s going to get her act together and be able to be a functional parent for the child. If I do what you’re asking, then when she comes out of rehab, she’s going to be homeless. What do we do now for this child? So from a child-centered perspective, what I’m going to do is keep it in place for now.”
So what happens if she gets out of rehab, has a problem, goes to jail, does drugs again, and goes back to rehab? I’m not saying the judge would do the same thing the third, fourth, fifth time. But the decision the court made at the time was very well reasoned and said, “No, I’m not going to follow the guideline. And the reason is that following the guideline in that scenario, it’s not in the best interest of the child.”
So that was a beautiful, complex example of where a court should deviate from a child support guideline. Where the court can deviate and kind of from a new guideline. And probably the most common is when you have an extraordinarily high earner.
Extraordinarily high earners, says somebody makes. By the way, this varies based upon locale.
For example, I had a high earner case in another part of the country that would’ve been an ordinary urban case in Orange County. Let’s say you have a person that makes $2 million in Orange County a year, is that a high earner? Probably not. Partly because of what the cost of living is.
This goes back to the primary idea of what child support is all about?
Yes. We need to remember the whole idea behind child support is you try to normalize when a child goes from one house, they’re not going to a mansion, or to a shack. That’s the whole concept in a child-centered philosophy. And if you approach deviating or not deviating from that analysis, you’ll reach the right conclusion. If you just run numbers, then you can get lost in what the policy and philosophy behind child support is.
Child Support for Extraordinarily High Earners
What about child support in the case of extraordinarily high earners?
Okay, what happens when you have a high earner that, say, makes a billion dollars a year.
Let’s use Jeff Bezos to illustrate. Jeff Bezos has a child.
I’m going to make up a number; perhaps he makes a billion dollars a year, although he probably earns or more than that. If you run the billion dollars a month through the child support guideline, I don’t know what that number you probably come up with, but let’s say it comes up with a million dollars a month in child support.
There is a fine line between increasing the amount of child support. This is the idea that says if you’re increasing the custodial parent’s or non-custodial parent’s lifestyle indirectly by virtue of providing monthly child support payments, that’s great, that’s cool. In other words, because now you’re benefiting from the child and indirectly benefiting from the other parent during their time.
But if you’re flipping that on its head and providing so much money that their child cannot realize any benefit and is far more likely to have a detriment occasioned by that, such as abuses that can happen by human beings when they are suddenly blessed with a million dollars a month of income. Common sense says no.
That’s where you do creative things, you can include in the child support payment of certain obligations and a certain amount of money, not a minimal amount of money.
I’m not saying it’s going to be peanuts, but I’m saying that, “Hey, can’t you really squeak by on $300,000 a month?”
And that gives the court discretion to deviate from the child support guideline in the case of an extraordinarily high earner. The methodology for that and the case law on that is all over the place. But at a minimum, what it requires the court to do, is make a finding of what child support would be without deviating from any guidelines, then make your finding as to why you’re deviating. Then, as you’re calculating child support, you can make your case for why the new amount would work.
So is that really a two-part test? Is a child support payor an extraordinarily high earner, and then if so, can we justify a deviation for good reasons, or do we deviate at all?
Yes. It really comes down to the question if it is in the best interest of the child to do that.
Is there a reason that that their reasonable needs are not going to be met?
Yes. Not only do we have all of the child’s needs that need to be met, we must also look at the payor’s standard of living.
There’s always the issue of the payor’s standard of living, and that’s the magic version of this child support order idea. We definitely want to bring it up.
Should the child be in private schools? “We can’t do college, we’ll talk about that. But should we start funding for college while the child is a minor?” “Wow, that’s a possibility. Yeah.” Because that’s what most parents do is they put away college education before the child reaches college age.
So that’s something in my mind that would be included in that calculation before you say we’ve got enough and that’s definitely not included in your everyday support for everyday children. You’re not going to get a separate deviation from a child support guideline for college contribution in most cases.
We talked about the court’s ability to deviate from guideline child support. Can parents agree to a child support amount that deviates from guidelines?
Parents can agree to whatever they want to agree to. So long as they make certain representations in the formal stipulation that the child’s needs will be met. I’ve never seen a court rejected stipulation that contains that language.
If I sat as a judge and I saw something that said, “Wait a second, this just makes no sense to me. I need to hear the backstory on this before I’m going to approve it.”
In other words, the potential payor makes $20,000 a month, and they agree to zero child support, then I would say, “Timeout. I want to know why we’re doing this because this doesn’t make sense to me on the face of what you’re saying.”
So, findings are usually required; in fact, they are always required if you’re deviating from California child support guidelines.
Most judges will probably approve it. Why? So long as you include language when you deviate to say, “We stipulate that this is below child support guidelines.”
The second you do that, either party, well that’s not true. The recipient party of the guideline child support can go to the court at any time without showing any change of any kind at all to modify this or to attempt to get the guideline amount of child support. In other words, it’s an agreement that’s in place until somebody seeks to change it.
The reverse is not true. If the payor stipulates to an agreement for child support of $2,000 and they should pay $3,000. If the child support guideline is $3,000 and they stipulate you agreed to $2,000. Can the $2,000 payor go ahead and modify that? No. Because it’s below child support guidelines as to the recipient, not to the payor and there’s a case on point on that issue.
Without a change in circumstance?
Yes, without showing a change of circumstance. In other words, in the first scenario, the recipients who are giving up the support can go the day after they signed the agreement and change it without showing anything. The payor would have to show that there had been a material change of circumstance that would then result in a lower guideline child support amounts below the what the agreed amount was.
Modifiability of California Child Support
When is child support in California modifiable?
When there’s a change of circumstance. That is often broader than some judges consider. For instance, if a payor is single and gets married and their new spouse has a significant income, suddenly the income tax to the payor just went up because they’re filing jointly with their new spouse. That is a change in circumstance.
Wait a second. My new spouse has three children, and they’re my stepchildren. Is that a change of circumstance? The answer is no. Because that’s going to decrease your tax liability. So, the problem is you have to then look carefully at whether or not the increase from your new spouse’s income is offset by the decrease of claiming the children.
A circumstance you obviously have to consider is losing a job. If overtime wasn’t considered an Ostler-Smith, then losing your overtime would be a change of circumstance. Sometimes the courts won’t give Ostler-Smith. Sometimes a judge will say, “No, you know what? I know you get overtime, and I’ve seen that issue, but the reality is you’ve averaged within $10,000 for the last five years. So I’m going to go with that number and I’m not going to do an Ostler-Smith.”
Well now the monkey is on the payor’s back. Then the have he has to watch it carefully, and if over time it appears that they’re going to be producing demonstrably lower income, that would be a change of circumstances to go back and modify child support orders.
But now, we have to look at factors things like seasonal issues that influence the payor’s financial situation. “Do you always make more money in May than you do in December?” Things like that. So all of those are factors to look at if there really is a change of circumstance.
Are there other changes in circumstances to consider?
Another change in circumstance could be changes to custodial timeshare. That’s a general thing. That was Jon Cryer’s point, which was, “Hey, change of circumstance. I now have the child full time.” And the court replied, “You’re right, but.”
California Child Support Resources
- Guideline Child Support Calculator
- California Guideline Child Support Calculator User Guide
- Qualified Business Income Deduction Worksheet (2018).
The Qualified Business Income Deduction (QBID) calculator is a tool provided by the Department of Child Support Services to assist in calculating the amount of any QBID they may need to enter in the Monthly Deduction Information section of the guideline calculator.