Family Law Updates
Basic Steps to calculate child support under the Illinois Income Shares Model.
This is a guide to calculating child support under the Illinois Income Shares model. The is related to the presentation I will be giving on June 14 for the Kane County Bar Association’s 11th Hour Seminar. A copy of the outline for the presentation is here, Additionally, the other handout materials, including the income share table, are included in this blog post. At the time this was drafted, Illinois Senate Bill 69 has passed both houses but has not yet been signed by the governor. Any citations are to the Senate Bill 69, which changed some of the citations.
Beginning July 1, 2017, the calculation for child support will change from a model that sets a child support obligation as a percentage of a child support obligor’s net income to one that is calculated using both parties’ income. Previously, Illinois law was based upon a percentage of a parent’s net income representing his or her minimum child support obligation. The basic difference between the prior Statute and income shares is that income shares establishes a table and that table is used to determine the basic support obligation for both parents. In the prior Statute, child support was set as a percentile of the non-custodial parent’s net income. Additionally, the income shares model changes how net income is calculated.
For an existing child support order, the new Statute does not give someone with an existing child support obligation the ability to recalculate their order based upon the new Statute. Section 510 of the Illinois Marriage and Dissolution of Marriage Act provides as follows: “the court may grant a petition for modification that seeks to apply the changes made to section (a) of section 505 by Public Act 99-764 to an order in effect before the effective date of Public Act 99-764 only upon a substantial change in circumstances. Public Act 99-764 itself does not constitute a substantial change in circumstances warranting a modification.” As a result, in order to modify a child support order, a party must allege and prove a change in circumstances substantial enough to warrant modification under Section 510 (a) of the Illinois Marriage and Dissolution of Marriage Act.
The basic steps for calculating child support under the Illinois Income shares model are:
(1) Determine each parent’s net income;
(2) Add the parent’s net incomes together to determine the combined net incomes of the parents;
(3) Select the corresponding appropriate amount from the schedule of basic child support obligations based upon the parties’ combined net income and number of children of the parents;
(4) Calculate each parent’s percentage share of the basic child support order. 750 ILCS 5/505 (a)(1.5).
I. Determine Each Parent’s Net Income
Under the prior Statute, net income was defined as the total of an obligor’s income from all sources less certain permitted deductions. Accordingly, Fed tax, State tax, FICA, medicare withholdings, mandatory retirement contributions, union dues, dependent or individual medical insurance, life insurance maintained due to court order, prior obligations of support or maintenance, expenditures for repayment of a debt that represent reasonable and necessary expenses for the production of wealth, and Foster Care payments from DCFS for providing licensed foster care to a foster child were all deductible.
On July 1, 2017, net income will be calculated based upon one of two different methods, a standardized tax amount or an individualized tax amount. To calculate a person’s net income for purposes of calculating a child support order, that person’s total gross income must be applied against either the standardized tax amount table created by the Illinois Department of Healthcare and Family Services, or determined as an individualized tax amount by determining an individual’s future federal tax payments, State tax payments, social security or self employment payments, and medicare tax.
A. Standardized tax Amount
A standardized tax amount is calculated by reference to a table prepared by HFS. The table was created by HFS and is intended to for a single person claiming the standard tax deduction, one personal exemption, and the applicable number of dependency deductions for the minor child or children of the parties, and social security and Medicare tax calculated at the federal insurance contributions rate.
On the table there is a separate table for the recipient parent that also references the number of children. The reason for this is that the recipient parent shall be deemed to be entitled to the dependency exemption unless the parties agree otherwise or a court rules otherwise. So automatically, the standardized tax amount will be inappropriate if the parties will be alternating child dependency exemptions.
B. Individualized tax amount
The individualized tax amount is the aggregate of federal income tax, State income tax, social security or self-employment tax, and Medicare Tax. Aside from this definition, the Statute does not really set forth how this is to be calculated. The Statute does permit the parties to stipulate to a methodology and computation, a provides for both evidentiary and summary hearings based upon affidavits. For purposes of establishing an individual tax amount, the major issue will be obtaining documents that establishes the tax filing status of either party, and their anticipated itemized deductions. So if an obligor anticipates changing their tax filing status or adding a large itemized deduction, this information must be considered in determining an obligor’s individualized tax amount.
C. What is new and or different in the new statute:
II. Add the net income of the parties together to find combined net income
This is simple addition. Add both parties’ net income (from either standard tax amounts or individualized tax amounts) determined in Part I. The sum of those numbers is the “combined net income” of the parties. The combined net income will be a number that will be used to determine the basic child support obligation, and will be used to determine each parent’s responsibility for a portion of the basic child support obligation.
III. Determine the basic child support obligation by reference to the Income Shares Schedule.
This table was created by Healthcare and Family Services in April 2017 and sets forth the basic child support obligation based upon the parties’ combined net income. The amount listed are in monthly amounts. For income above the table (more than 30,000 per month combined net income) the court is given great latitude in determining what the basic support obligation would be. However, the Statute provides that in those circumstances, the amount of child support should be at least the highest rate of the basic support obligation.
To determine the basic child support obligation, the income shares table should be referenced, and the basic child support obligation is determined from the parties’ combined net income and number of children that need to be supported.
IV. Calculate each Parent’s percentage share of the combined net income
A parent’s net income, as determined in Step I, should be divided by the parties’ combined net income, as determined in Step II. The quotient, expressed as a decimal (for example .70 represents 70 %) is a parties’ percentage share of combined net income.
(Net Income of a parent) divided by (Combined Net Income) = percentage share of basic child support obligation for that parent.
V. Allocate the basic child support obligation to the parties as their individual child support amount.
To calculate the child support obligation, the basic child support obligation (as determined by the income share schedule) is multiplied by the percentage share of the combined net income for the parent who does not have a majority of parenting time.
the parent who does not have a majority of parenting time will multiply the basic child support obligation by his or her Percentage Share of the Basic Child Support Obligation and the product of that calculation will be his or her individualized child support obligation. The obligation of the parent with a majority of parenting time can be calculated. However, the amount calculated does not offset the other parent’s obligation. For a basic child support calculation, it is presumed that the parent with a majority of parenting time spends it on the child(ren) support.
VI. Parenting time can reduce the child support obligation
Under the new Statute, a significant amount of overnight parenting time may reduce an obligor’s child support obligation. Depending upon the allocation of parenting time, calculating a child support order can mean calculating one of three different types of child support orders: a basic child support calculation, a shared care child support obligation, or a split physical care obligation.
Obviously a basic child support calculation is made if one parent has more than 60 percent of parenting time for all the minor children of the parties. The obligor will pay his or her percentage share of the basic child support obligation.
146 overnights is the magic number of days the parent with the minority of allocated parenting time needs in order to have some reduction in their support obligation. This would be just short of three overnights per week. Only overnight parenting time is considered for this calculation. This is how a child support obligation is calculated for shared physical care.
The parties may also have split physical care. When each parent has primary care of at least one but not all the minor children, support is calculated with two worksheets. The amounts of support is each parent is obligated to pay to the other parent is offset. The parent who has the larger obligation will pay the difference between the two obligations to the other parent. This is how a split physical care calculation is made.
VII. Additional Child Expenses Beyond the Basic Child Support Obligation – Health Insurance and Care
The basic child support obligation is designed to cover part or all of the following expenses: housing, food, transportation, clothing, basic ordinary out-of-pocket medical expenses, and miscellaneous expenses. The court, in its own discretion, shall provide for the child or children current and future medical insurance by ordering one or both parents to enroll the child on a current health insurance policy, require the purchase of one or more of health, dental, or vision insurance policies for the child or children, or provide for child or children’s current and future medical needs. 750 ILCS 5/505 (a)(4). For purpose of calculation, the cost of premiums for health insurance are added to the basic child support obligation (as determined below in part III) as an adjustment and are allocated to the parties based upon each parent’s percentage share of combined net income. The reason for this is simple: generally one parent will pay for the entire cost of health insurance through their employment. Under income shares, medical insurance costs are not part of an individualized or standardized tax amount. As a result, these costs need to be allocated between the parties. By adding these costs to the basic child support obligation, and requiring both parties to contribute to these costs, an obligor’s child support obligation will be increased or reduced depending upon whether the obligor is providing medical insurance.
The reasonable cost of health insurance was codified by the Statute. If it exceeds 5 percent of the providing parent’s gross income, it is not reasonable . See 750 ILCS 5/505 (a)(4)(G)
Cash medical assistance means the amount of money each parent is required to pay if medical insurance is not reasonably available for the child and the child has been enrolled for medical insurance through HFS. Although the Statute does not indicate how this is to be calculated, it is likely that cash medical assistance will be an allocation of any actual fees paid to the HFS for medical insurance.
VIII. Additional Child Expenses Beyond the Basic Child Support Obligation – Child Care
The court may order contribution to child care expenses in addition to the basic child support obligation. 750 ILCS 5/505 (a)(3.7). The statute defines child care expenses as actual expenses reasonably necessary to permit a parent to be employed, to attend educational or vocational training programs to improve employment opportunities, or to search for employment opportunities. 750 ILCS 5/505 (a)(3.7)(A). Like for health care, this is discretionary, and obviously only applies to child care that is needed due to work, education, or for a job search.
In order to calculate these child care expenses, the total cost of child care should be added to the basic child support obligation. If a federal income tax credit is permitted, this credit should be subtracted from the total cost of child care. These cost shall be allocated to the parties based upon each parties’ percentile share of combined net income. Alternatively, each party can pay their share to the child care provider directly.
IX. Additional Child Expenses Beyond the Basic Child Support Obligation – Extra-curricular Activities and School Expenses
The court may order both parties to contribute to extra-curricular and school expenses that are intended to enhance the educational, athletic, social, or cultural development of the child. Again, any such payments are a matter of discretion by the court. Further, the statute does not set forth how these expenses are calculated; as a result, the court would have a great deal of flexibility in ordering the parties to contribute to these expenses.