This post will address child support obligations for individuals who earn an income substantially higher than the average individual. If you are not aware of how child support is calculated, an overview can be found here, Family Law – Child Support. The primary factor in calculating child support is determining the weekly gross income of each parent. In calculating a child support for a high income individual, it is imperative that your attorney take into account potential deductions in the calculation of weekly gross income.
Calculating Child Support in Indiana
- The Indiana Child Support Guidelines state that an average tax factor of 21.88% was used as an assumption when calculating child support.
- Under the Indiana Guideline, where taxes vary significantly from the assumed rate of 21.88 percent, a trial court may choose to deviate from the guideline amount where the variance is substantiated by evidence at the support hearing. See Commentary to Guideline 1.
- In plain English, that means that if you have an effective tax rate above 21.88%, your gross income for purposes of calculating child support may be reduced.
What Might You Pay?
By way of example, let’s say you make $520,000.00 per year, or $10,000 per week, and you paid $156,000 in taxes. Your effective tax rate would be 30%, a difference of 8.12% from the assumed rate in the Guidelines.
Failure to account for such a tax differential could result in you paying more in child support than is contemplated by the Indiana Child Support Guidelines. Other factors that could potentially impact a child support calculation include out-of-state income taxes, self-employment taxes, payment of spousal maintenance or alimony, and mandatory capital or retirement contributions.
Are You Paying a Fair & Just Sum of Child Support?
These factors cannot be used as a way of unfairly reducing your child support obligation. However, if applicable, these factors should be discussed and considered by your attorney to ensure that you are paying a fair and just sum of child support. For additional information concerning child support, please go to our discussion of child support and feel free to call your trusted family law attorneys at ROBERTS MEANS, LLC at (317) 353-3600 or click here to contact us via email if you have any questions.