- 1 IRS Publication 503: Child And Dependent Care Expenses
- 2 Updated 2016: Can I Claim My Foster Child On My Taxes?
- 2.1 You’re a new foster parent. You attended the orientation, filled out all of the proper paperwork, went through every inspection process and took all of the appropriate training. You waited longer than expected but finally have a foster child in your home. You’ve found out this new world of fostering is extremely rewarding, and the idea of providing a loving home for a child in need has made your life richer. Your foster child has been in your home for 6 months and tax season is at hand. You have other children and know the steps you need to take to claim them for tax purposes, but what about your foster child? You may be wondering, “Can I claim my foster child on my taxes?” If you meet certain criteria, the answer is yes.
- 2.2 Can I Claim My Foster Child On My Taxes? – Qualifications
- 2.3 Can I Claim My Foster Child On My Taxes? – What if I’m Disallowed?
- 2.4 Can I Claim My Foster Child On My Taxes? – The More You Know
- 3 can i claim child care expenses without claiming the child
IRS Publication 503: Child And Dependent Care Expenses
DEFINITION of 'IRS Publication 503: Child And Dependent Care Expenses'
A document published by the Internal Revenue Service that outlines the criteria which must be met in order for a taxpayer to deduct expenses for the care of children and dependents. IRS Publication 503 indicates that expenses can be claimed only if they are incurred in order to allow the taxpayer to work or look for employment.
BREAKING DOWN 'IRS Publication 503: Child And Dependent Care Expenses'
In order to claim tax credits for children or dependents, certain criteria must be met: the persons claimed must be qualified, the taxpayer must have worked at some point during the year, expenses must be incurred so that the taxpayer could work or look for work, and care payments must be made to a non-dependent.
Up to 35% of expenses related to the care of children and dependents can be claimed by a taxpayer. In addition, expenses related to the care of children apply only to children under the age of 13.
Updated 2016: Can I Claim My Foster Child On My Taxes?
You’re a new foster parent. You attended the orientation, filled out all of the proper paperwork, went through every inspection process and took all of the appropriate training. You waited longer than expected but finally have a foster child in your home. You’ve found out this new world of fostering is extremely rewarding, and the idea of providing a loving home for a child in need has made your life richer. Your foster child has been in your home for 6 months and tax season is at hand. You have other children and know the steps you need to take to claim them for tax purposes, but what about your foster child? You may be wondering, “Can I claim my foster child on my taxes?” If you meet certain criteria, the answer is yes.
Can I Claim My Foster Child On My Taxes? – Qualifications
In order to answer your question about claiming your foster child on your taxes, there are a few questions you must answer first. Does your child meet the Internal Revenue Services’ (IRS) definition of a foster child? According to the IRS, a foster child is someone who is “placed with you by judgment, court order or an authorized placement agency (state or local government organization).”
Is she under the age of 19 (or 24 if permanently disabled) by the end of the tax year? Has she lived with you for at least 6 months of the specified tax year? You reflect on your journey as a family for the last 6 months and remember the first family trip that she went on – Walt Disney World. You beam inside as you recall how bright her smile was as she took a ride on the Tea Cups, bonded with the Disney family, and, more importantly, connected with your own.
She isn’t old enough to work yet, so you don’t have to worry about her filing a joint return. If she were though, filing a joint return would not be an option if you want to claim her for tax purposes. Her board payment is not considered income she has brought in, so she has not provided more than half of her support for the tax year. Those are considered reimbursements by the state and have no effect on eligibility – so that’s good news.
Your answers line up! Also, your foster child is a U.S. citizen and has a valid Social Security number, so she can be claimed as a dependent on your 2016 taxes, which will bring a reduction to your gross income by $4,050.00.
Can I Claim My Foster Child On My Taxes? – What if I’m Disallowed?
Even though she is living with you, your foster child’s biological parents have the option of claiming her as a dependant. If they choose to, there is a possibility that you would be disallowed. In other words, you would not be able to claim her on your taxes.
If you choose to appeal that decision, you could reach out to the IRS using the contact information they provide upon notifying you of this change. Before reaching out, though, it’s important to gather all supporting evidence that shows your foster child has been placed in your home for over 6 months by your local child welfare agency. In addition to showing proof via monthly board payments, you can request paperwork from your local agency verifying you have been the primary caregiver of your foster child.
Can I Claim My Foster Child On My Taxes? – The More You Know
For in-depth information on how to claim your foster child on your taxes, click here (http://www.irs.gov/pub/irs-pdf/p501.pdf) for the Internal Revenue Service Publication 501, Exemptions, Standard Deduction and Filing Information.
Please note that this is not legal advice. Talk to your tax advisor, visit the IRS’ website at www.IRS.Gov or call them at 800.829.1040 for specific questions regarding claiming your foster child as a dependent.
Author: Salendria Mabrey, FAFS Communication & Development Associate
Salendria Mabrey is a Communication and Development Associate at Foster and Adoptive Family Services.
can i claim child care expenses without claiming the child
Indiana Rules of Court
Child Support Rules and Guidelines
Adopted Effective October 1, 1989
Including Amendments Received Through January 1, 2016
A. Definition of Weekly Gross Income.
1. Definition of Weekly Gross Income.
2. Self-Employment, Business Expenses, In-Kind Payments and Related Issues.
3. Unemployed, Underemployed, and Potential Income.
B. Income Verification.
1. Submitting Worksheet to Court.
2. Documenting Income.
C. Computation of Weekly Adjusted Income.
1. Adjustment for Subsequent born or Legally Adopted Child(ren).
2. Court Orders for Prior-born Child(ren).
3. Legal Duty of Support for Prior-born Children.
4. Alimony or Maintenance.
D. Basic Child Support Obligation.
E. Additions to the Basic Child Support Obligation.
1. Work-related Child Care Expense.
2. Cost of Health Insurance for Child(ren).
3. Extraordinary Health Care Expense.
4. Extraordinary Educational Expense.
F. Computation of Parent’s Child Support Obligation.
1. Division of Obligation Between Parents.
2. Deviation from Guideline Amount.
G. Adjustments to Parent’s Child Support Obligation.
1. Obligation from Post-Secondary Education Worksheet.
2. Weekly Cost of Work-related Child Care Expenses.
3. Weekly Cost of Health Insurance Premiums for Child(ren).
4. Parenting Time Credit.
5. Effect of Social Security Benefits.
Cash medical support
Explanation of 6% rule/uninsured health care expenses
Extraordinary educational expenses
Other extraordinary expenses
Accountability of the custodial parent for support received
Rounding child support amounts
· Amended Child Support Obligation Worksheet (CSOW)
· Parenting Time Credit Worksheet
· Post-Secondary Education Worksheet (PSEW)
· Guideline Schedules for Weekly Support Payments
Support Rule 1. Adoption of Child Support Rules and Guidelines
The Indiana Supreme Court hereby adopts the Indiana Child Support Guidelines, as drafted by the Judicial Administration Committee and adopted by the Board of the Judicial Conference of Indiana and all subsequent amendments thereto presented by the Domestic Relations Committee of the Judicial Conference of Indiana, as the Child Support Rules and Guidelines of this Court.
Support Rule 2. Presumption
In any proceeding for the award of child support, there shall be a rebuttable presumption that the amount of the award which would result from the application of the Indiana Child Support Guidelines is the correct amount of child support to be awarded.
Support Rule 3. Deviation from Guideline Amount
If the court concludes from the evidence in a particular case that the amount of the award reached through application of the guidelines would be unjust, the court shall enter a written finding articulating the factual circumstances supporting that conclusion.
GUIDELINE 1. PREFACE
Guidelines to determine levels of child support and educational support were developed by the Judicial Administration Committee of the Judicial Conference of Indiana and adopted by the Indiana Supreme Court. The guidelines are consistent with the provisions of Indiana Code Title 31 which place a duty for child support and educational support upon parents based upon their financial resources and needs, the standard of living the child would have enjoyed had the marriage not been dissolved or had the separation not been ordered, the physical or mental condition of the child, and the child's educational needs.
The Guidelines have three objectives:
(1) To establish as state policy an appropriate standard of support for children, subject to the ability of parents to financially contribute to that support;
(2) To make awards more equitable by ensuring more consistent treatment of people in similar circumstances; and,
(3) To improve the efficiency of the court process by promoting settlements and giving courts and the parties guidelines in settling the level of awards.
The Indiana Child Support Guidelines are based on the Income Shares Model, developed by the Child Support Project of the National Center for State Courts. The Income Shares Model is predicated on the concept that the child should receive the same proportion of parental income that he or she would have received if the parents lived together. Because household spending on behalf of children is intertwined with spending on behalf of adults for most expenditure categories, it is difficult to determine the proportion allocated to children in individual cases, even with exhaustive financial information. However, a number of authoritative economic studies provide estimates of the average amount of household expenditure on children in intact households. These studies have found the proportion of household spending devoted to children is related to the level of household income and to the number and ages of children. The Indiana Child Support Guidelines relate the level of child support to income and the number of children. In order to provide simplicity in the use of the Guidelines, however, child support figures reflect a blend of all age categories weighted toward school age children.
Based on this economic evidence, the Indiana Child Support Guidelines calculate child support as the share of each parent's income estimated to have been spent on the child if the parents and child were living in an intact household. The calculated amount establishes the level of child support for both the custodial and non-custodial parent. Absent grounds for a deviation, the custodial parent should be required to make monetary payments of child support, if application of the parenting time credit would so require.
History of Development. In June of 1985, the Judicial Reform Committee (now the Judicial Administration Committee) of the Judicial Conference of Indiana undertook the task of developing child support guidelines for use by Indiana judges. While the need had been long recognized in Indiana, the impetus for this project came from federal statutes requiring guidelines to be in place no later than October 1, 1987. P.L. &8‑378. Paradoxically, guidelines did not need to be mandatory under the 1984 federal legislation to satisfy federal requirements; they were only required to be made available to judges and other officials with authority to establish child support awards. 45 CFR Ch. III, § 302.56.
The final draft was completed by the Judicial Reform Committee on July 24, 1987, and was presented to the Judicial Conference of Indiana Board of Directors on September 17, 1987. The Board accepted the report of the Reform Committee, approved the Guidelines and recommended their use to the judges of Indiana in all matters of child support.
Family Support Act of 1988. On October 13, 1988, the United States Congress passed the "Family Support Act of 1&88,9quot; P.L. 100‑485 amending the Social Security Act by deleting the original language which made application of the Guideline discretionary and inserted in its place the following language:
"There shall be a rebuttable presumption, in any judicial or administrative proceeding for the award of child support, that the amount of the award which would result from the application of such guidelines is the correct amount of child support to be awarded. A written finding or specific finding on the record that the application of the guidelines would be unjust or inappropriate in a particular case, as determined under criteria established by the State, shall be sufficient to rebut the presumption in that case." P.L. 100‑485, § 103(a)(2).
The original Guidelines that went into effect October 1, 1987 and their commentary were revised by the Judicial Administration Committee to reflect the requirement that child support guidelines be a rebuttable presumption. The requirement applies to all cases where support is set after October 1, 1989, including actions brought under Title IV‑D of the Social Security Act (42 U.S.C.A. § 651‑669). Also, after October 1, 1989, counties and individual courts may not opt to use alternate methods of establishing support. The Indiana Child Support Guidelines were required to be in use in all Indiana courts in all proceedings where child support is established or modified on and after October 1, 1989.
Periodic Review of Guidelines and Title IV‑D Awards. The "Family Support Act of 1&889quot; also requires that the Guidelines be reviewed at least every four years "to assure their application results in the determination of appropriate child support award amounts." P.L. 100‑485, § 103(b). Further, each state must develop a procedure to ensure that all Title IV‑D awards are periodically reviewed to ensure that they comply with the Guidelines. P.L. 100‑485, § 103(c).
Compliance With State Law. The Child Support Guidelines were developed specifically to comply with federal requirements, as well as Indiana law.
Objectives of the Indiana Child Support Guidelines. The following three objectives are specifically articulated in the Indiana Child Support Guidelines:
1. To establish as state policy an appropriate standard of support for children, subject to the ability of parents to financially contribute to that support. When the Guidelines were first recommended for use by the Indiana Judicial Conference on September 17, 1987, many courts in the state had no guideline to establish support. Many judges had expressed the need for guidelines, but few had the resources to develop them for use in a single court system. The time, research and economic understanding necessary to develop meaningful guidelines were simply beyond the resources of most individual courts.
2. To make awards more equitable by ensuring more consistent treatment of people in similar circumstances. This consistency can be expected not only in the judgments of a particular court, but between jurisdictions as well. What is fair for a child in one court is fair to a similarly situated child in another court.
3. To improve the efficiency of the court process by promoting settlements and giving courts and the parties guidelines in settling the level of awards. In other words, when the outcome is predictable, there is no need to fight. Because the human experience provides an infinite number of variables, no guideline can cover every conceivable situation, so litigation is not completely forestalled in matters of support. If the Guidelines are consistently applied, however, those instances should be minimized.
Economic Data Used in Developing Guidelines. What does it take to support a child? The question is simple, but the answer is extremely complex. Yet, the question must be answered if an adequate amount of child support is to be ordered by the court. Determining the cost attributable to children is complicated by intertwined general household expenditures. Rent, transportation, and grocery costs, to mention a few, are impossible to accurately apportion between family members. In developing these Guidelines, a great deal of reliance was placed on the research of Thomas J. Espenshade, (Investing In Children, Urban Institute Press, 1984) generally considered the most authoritative study of household expenditure patterns. Espenshade used data from 8,547 households and from that data estimated average expenditures for children present in the home. Espenshade's estimates demonstrate that amounts spent on the children of intact households rise as family income increases. They further demonstrate at constant levels of income that expenditures decrease for each child as family size increases. These principles are reflected in the Guideline Schedules for Weekly Support Payments, which are included in the Indiana Child Support Guidelines. By demonstrating how expenditures for each child decrease as family size increases, Espenshade should have put to rest the previous practice of ordering equal amounts of support per child when two or more children are involved. Subsequent guidelines reviews have considered more current economic studies of child-rearing expenditures (e.g., Mark Lino, Expenditures on Children by Families: 2006 Annual Report, United States Department of Agriculture, 2007; David Betson, State of Oregon Child Support Guidelines Review: Updated Obligation Scales and Other Considerations, report to State of Oregon Department of Justice, 2006). These periodic guidelines reviews have concluded that the Indiana Guidelines based on the Espenshade estimates are generally within the range of more current estimates of child-rearing expenditures. A notable exception at high incomes leveled off the child support schedule for combined weekly adjusted incomes above $4,000. In 2009 this exception was removed. The increase is now incorporated into the schedule up to combined weekly adjusted incomes of $10,000 and a formula is provided for incomes above that amount. Previously, a formula was provided for combined weekly adjusted incomes above $4,000.
Income Shares Model. After review of five approaches to the establishment of child support, the Income Shares Model was selected for the Indiana Guidelines. This model was perceived as the fairest approach for children because it is based on the premise that children should receive the same proportion of parental income after a dissolution that they would have received if the family had remained intact. Because it then apportions the cost of children between the parents based on their means, it is also perceived as being fair to parents. In applying the Guidelines, the following steps are taken:
1. The gross income of both parents is added together after certain adjustments are made. A percentage share of income for each parent is then determined.
2. The total is taken to the support tables, referred to in the Indiana Guidelines as the Guideline Schedules for Weekly Support Payments, to determine the total cost of supporting a child or children.
3. Work‑related child care expenses and the weekly costs of health insurance premiums for the child(ren) are then added to the basic child support obligation.
4. The child support obligation is then prorated between the parents, based on their proportionate share of the weekly adjusted income, hence the name "income shares."
The Income Shares Model was developed by The Institute for Court Management of the National Center for State Courts under the Child Support Guidelines Project. This approach was designed to be consistent with the Uniform Marriage and Divorce Act, the principles of which are consistent with IC 31̴&;16‑6‑1. Both require the court to consider the financial resources of both parents and the standard of living the child would have enjoyed in an intact family.
Gross Versus Net Income. One of the policy decisions made by the Judicial Administration Committee in the early stages of developing the Guidelines was to use a gross income approach as opposed to a net income approach. Under a net income approach, extensive discovery is often required to determine the validity of deductions claimed in arriving at net income. It is believed that the use of gross income reduces discovery. (See Commentary to Guideline 3A). While the use of gross income has proven controversial, this approach is used by the majority of jurisdictions and, after a thorough review, is considered the best reasoned.
The basic support obligation would be the same whether gross income is reduced by adjustments built into the Guidelines or whether taxes are taken out and a net income option is used. A support guideline schedule consists of a column of income figures and a column of support amounts. In a gross income methodology, the tax factor is reflected in the support amount column, while in a net income guideline, the tax factor is applied to the income column. In devising the Indiana Guidelines, an average tax factor of 21.88 percent was used to adjust the support column.
Of course, taxes vary for different individuals. This is the case whether a gross or net income approach is used. 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.
Flexibility Versus the Rebuttable Presumption. Although application of the Guideline yields a figure that becomes a rebuttable presumption, there is room for flexibility. Guidelines are not immutable, black letter law. A strict and totally inflexible application of the Guidelines to all cases can easily lead to harsh and unreasonable results. If a judge believes that in a particular case application of the Guideline amount would be unreasonable, unjust, or inappropriate, a finding must be made that sets forth the reason for deviating from the Guideline amount. The finding need not be as formal as Findings of Fact and Conclusions of Law; the finding need only articulate the judge's reasoning. For example, if under the facts and circumstances of the case, the noncustodial parent would bear an inordinate financial burden, the following finding would justify a deviation:
"Because the noncustodial parent suffers from a chronic medical condition requiring uninsured medical expenses of $357.00 per month, the Court believes that setting child support in the Guideline amount would be unjust and instead sets support in the amount of $___per week."
Agreed Orders submitted to the court must also comply with the "rebuttable presumption" requirement; that is, the order must recite why the order deviates from the Guideline amount.
1. Phasing in Support Orders. Some courts may find it desirable in modification proceedings to gradually implement the Guideline order over a period of time, especially where support computed under the Guideline is considerably higher than the amount previously paid. Enough flexibility exists in the Guidelines to permit that approach, as long as the judge's rationale is explained with an entry such as:
"The Guideline's support represents an increase of 40%, and the court finds that such an abrupt change in support obligation would render the obligor incapable of meeting his/her other established obligations. Therefore, the Court sets support in the amount of $_____ and, on October 1, 20___, it shall increase to $_____ and, on September 1, 20__, obligor shall begin paying the Guideline amount of $_____."
2. Situations Calling for Deviation. An infinite number of situations may prompt a judge to deviate from the Guideline amount. For illustration only, and not as a complete list, the following examples are offered:
· One or both parties pay union dues as a condition of employment.
· A party provides support for an elderly parent.
· The noncustodial parent purchases school clothes.
· The noncustodial parent has extraordinary medical expenses for himself or herself.
· Both parents are members of the armed forces and the military provides housing.
· The obligor is still making periodic payments to a former spouse pursuant to a prior Dissolution Decree.
· One of the parties is required to travel an unusually long distance in the course of employment on a regular or daily basis and incurs an unusually large expense for such travel, and
· The custodial or noncustodial parent incurs significant travel expense in exercising parenting time.
Again, no attempt has been made to define every possible situation that could conceivably arise when determining child support and to prescribe a specific method of handling each of them. Practitioners must keep this in mind when advising clients and when arguing to the court. Many creative suggestions will undoubtedly result. Judges must also avoid the pitfall of blind adherence to the computation for support without giving careful consideration to the variables that require changing the result in order to do justice.
GUIDELINE 2. USE OF THE GUIDELINES
The Guideline Schedules provide calculated amounts of child support. For obligors with a combined weekly adjusted income, as defined by these Guidelines, of less than $100.00, the Guidelines provide for case̴&;by‑case determination of child support. When a parent has extremely low income the amount of child support recommended by use of the Guidelines should be carefully scrutinized. The court should consider the obligor's income and living expenses to determine the maximum amount of child support that can reasonably be ordered without denying the obligor the means for self‑support at a minimum subsistence level. The court may consider $12.00 as a minimum child support order; however, there are situations where a $0.00 support order is appropriate. A numeric amount of child support shall be ordered.
Temporary maintenance may be awarded by the court not to exceed thirty‑five percent (35%) of the obligor's weekly adjusted income. In no case shall child support and temporary maintenance exceed fifty percent (50%) of the obligor's weekly adjusted income. Temporary maintenance and/or child support may be ordered by the court either in dollar payments or "in‑kind9quot; payments of obligations.
Federal law requires the Indiana Child Support Guidelines be applied in every instance in which child support is established including, but not limited to, dissolutions of marriage, legal separations, paternity actions, juvenile proceedings, petitions to establish support and Title IV D proceedings.
Minimum Support. The Guideline's schedules for weekly support payments do not provide an amount of support for couples with combined weekly adjusted income of less than $100.00. Consequently, the Guidelines do not establish a minimum support obligation. Instead the facts of each individual case must be examined and support set in such a manner that the obligor is not denied a means of self‑support at a subsistence level. For example, (1) a parent who has a high parenting time credit; (2) a parent who suffers from debilitating mental illness; (3) a parent caring for a disabled child; (4) an incarcerated parent; (5) a parent or a family member with a debilitating physical health issue; or, (6) a natural disaster are significant but not exclusive factors for the court to consider in setting a child support order. The court should not automatically attribute minimum wage to parents who, for a variety of factors, are not capable of earning minimum wage.
Where parents live together with the child and share expenses, a child support worksheet shall be completed and a $0.00 order may be entered as a deviation.
Temporary Maintenance. It is recommended that temporary maintenance not exceed thirty‑five percent (35%) of the obligor's weekly adjusted income. The maximum award should be reserved for those instances where the custodial spouse has no income or no means of support, taking into consideration that spouse's present living arrangement (i.e., whether or not he or she lives with someone who shares or bears the majority of the living expense, lives in the marital residence with little or no expense, lives in military housing, etc.).
It is further recommended that the total of temporary maintenance and child support should not exceed fifty percent (50%) of the obligor's weekly adjusted income. In computing temporary maintenance, in‑kind payments, such as the payment of utilities, house payments, rent, etc., should also be included in calculating the percentage limitations. Care must also be taken to ensure that the obligor is not deprived of the ability to support himself or herself.
Spousal Maintenance. It should also be emphasized that the recommendations concerning maintenance apply only to temporary maintenance, not maintenance in the Final Decree. An award of spousal maintenance in the Final Decree must, of course, be made in accordance with Indiana statute. These Guidelines do not alter those requirements. Theoretically, when setting temporary maintenance, child support should come first. That is, if child support is set at forty percent (40%) of the obligor's weekly adjusted income, only a maximum of ten percent (10%) of the obligor's income would be available for maintenance. That distinction, however, makes little practical difference. As with temporary maintenance, care should be taken to leave the obligor with adequate income for subsistence. In many instances the court will have to review the impact of taxes on the obligor's income before entering an order for spousal maintenance in addition to child support to avoid injustice to the obligor.
The worksheet provides a deduction for spousal maintenance paid (Line 1D). Caution should be taken to assure that any credit taken is for maintenance and not for periodic payments as the result of a property settlement. No such deduction is given for amounts paid by an obligor as the result of a property settlement, although that is a factor the court may wish to consider in determining the obligor's ability to pay the scheduled amount of support at the present time. Again, flexibility was intended throughout the Guidelines and they were not intended to place the obligor in a position where he or she loses all incentive to comply with the orders of the court.
Guidelines to be Applied in all Matters of Child Support. The Indiana Child Support Guidelines shall be applied in every instance in which child support is established including, but not limited to, dissolutions of marriage, legal separations, paternity actions, juvenile proceedings, petitions to establish support and Title IV‑D proceedings.
The Indiana legislature requires the Indiana Child Support Guidelines be applied and the Child Support Worksheet be used in determining the manner in which financial services to children that are CHINS (Child in Need of Services) or delinquent are to be repaid. Similarly, the legislature requires the court to use the Guidelines to determine the financial contribution required from each parent of a child or the guardian of the child’s estate for costs associated with the institutional placement of a child.
GUIDELINE 3. DETERMINATION OF CHILD SUPPORT AMOUNT
1. Definition of Weekly Gross Income (Line 1 of Worksheet). For purposes of these Guidelines, "weekly gross income" is defined as actual weekly gross income of the parent if employed to full capacity, potential income if unemployed or underemployed, and imputed income based upon "in‑kind9quot; benefits. Weekly gross income of each parent includes income from any source, except as excluded below, and includes, but is not limited to, income from salaries, wages, commissions, bonuses, overtime, partnership distributions, dividends, severance pay, pensions, interest, trust income, annuities, capital gains, social security benefits, workmen's compensation benefits, unemployment insurance benefits, disability insurance benefits, gifts, inheritance, prizes, and alimony or maintenance received. Social Security disability benefits paid for the benefit of the child must be included in the disabled parent’s gross income. The disabled parent is entitled to a credit for the amount of Social Security disability benefits paid for the benefit of the child. Specifically excluded are benefits from means‑tested public assistance programs, including, but not limited to, Temporary Aid to Needy Families (TANF), Supplemental Security Income, and Food Stamps. Also excluded are survivor benefits received by or for other children residing in either parent’s home.
2. Self‑Employment, Business Expenses, In‑Kind Payments and Related Issues. Weekly Gross Income from self‑employment, operation of a business, rent, and royalties is defined as gross receipts minus ordinary and necessary expenses. In general, these types of income and expenses from self‑employment or operation of a business should be carefully reviewed to restrict the deductions to reasonable out̴&;of‑pocket expenditures necessary to produce income. These expenditures may include a reasonable yearly deduction for necessary capital expenditures. Weekly Gross Income from self‑employment may differ from a determination of business income for tax purposes.
Expense reimbursements or in‑kind payments received by a parent in the course of employment, self‑employment, or operation of a business should be counted as income if they are significant and reduce personal living expenses. Such payments might include a company car, free housing, or reimbursed meals.
The self‑employed shall be permitted to deduct that portion of their FICA tax payment that exceeds the FICA tax that would be paid by an employee earning the same Weekly Gross Income.
3. Unemployed, Underemployed and Potential Income. If a court finds a parent is voluntarily unemployed or underemployed without just cause, child support shall be calculated based on a determination of potential income. A determination of potential income shall be made by determining employment potential and probable earnings level based on the obligor's work history, occupational qualifications, prevailing job opportunities, and earnings levels in the community. If there is no work history and no higher education or vocational training, the facts of the case may indicate that Weekly Gross Income be set at least at the federal minimum wage level.
1. Child Support Calculations Generally. Weekly Gross Income, potential income, weekly adjusted income and basic child support obligation have very specific and well‑defined meanings within the Indiana Child Support Guidelines. Their definitions are not repeated in the Commentary, but further explanation follows.
2. Determination of Weekly Gross Income. Weekly Gross Income is the starting point in determining the child support obligation, and it must be calculated for both parents. If one or both parents have no income, then potential income may be calculated and used as Weekly Gross Income. Likewise, imputed income may be substituted for, or added to, other income in arriving at Weekly Gross Income. It includes such items as free housing, a company car that may be used for personal travel, and reimbursed meals or other items received by the obligor that reduce his or her living expenses.
The Child Support Obligation Worksheet does not include space to calculate Weekly Gross Income. It must be calculated separately and the result entered on the worksheet.
In calculating Weekly Gross Income, it is helpful to begin with total income from all sources. This figure may not be the same as gross income for tax purposes. Internal Revenue Code of 1986, § 61. Means‑tested public assistance programs (those based on income) are excluded from the computation of Weekly Gross Income, but other government payments, such as Social Security benefits and veterans pensions, should be included. However, survivor benefits paid to or for the benefit of their children are not included. In cases where a custodial parent is receiving, as a representative payee for a prior born child, Social Security survivor benefits because of the death of the prior born child’s parent, the court should carefully consider Line 1 C of the basic child support obligation worksheet, Legal Duty of Support for Prior-born Children. Because the deceased parent’s contribution for the support of the prior born child is being partially paid by Social Security survivor benefits that are excluded from Weekly Gross Income, the court should not enter, on Line 1C, an amount that represents 100% of the cost of support for the prior born child. The income of the spouses of the parties is not included in Weekly Gross Income.
a. Self‑Employment, Rent and Royalty Income. Calculating Weekly Gross Income for the self‑employed or for those who receive rent and royalty income presents unique problems, and calls for careful review of expenses. The principle involved is that actual expenses are deducted, and benefits that reduce living expenses (i.e. company cars, free lodging, reimbursed meals, etc.) should be included in whole or in part. It is intended that actual out̴&;of‑pocket expenditures for the self‑employed, to the extent that they are reasonable and necessary for the production of income, be deducted. Reasonable deductions for capital expenditures may be included. While income tax returns may be helpful in arriving at Weekly Gross Income for a self‑employed person, the deductions allowed by the Guidelines may differ significantly from those allowed for tax purposes.
The self‑employed pay FICA tax at twice the rate that is paid by employees. At present rates, the self‑employed pay fifteen and thirty one‑hundredths percent (15.30%) of their gross income to a designated maximum, while employees pay seven and sixty‑five one-hundredths percent (7.65%) to the same maximum. The self‑employed are therefore permitted to deduct one‑half of their FICA payment when calculating Weekly Gross Income.
b. Overtime, Commissions, Bonuses and Other Forms of Irregular Income. There are numerous forms of income that are irregular or nonguaranteed, which cause difficulty in accurately determining the gross income of a party. Overtime, commissions, bonuses, periodic partnership distributions, voluntary extra work and extra hours worked by a professional are all illustrations, but far from an all‑inclusive list, of such items. Each is includable in the total income approach taken by the Guidelines, but each is also very fact sensitive.
Each of the above items is sensitive to downturns in the economy. The fact that overtime, for example, has been consistent for three (3) years does not guarantee that it will continue in a poor economy. Further, it is not the intent of the Guidelines to require a party who has worked sixty (60) hour weeks to continue doing so indefinitely just to meet a support obligation that is based on that higher level of earnings. Care should be taken to set support based on dependable income, while at the same time providing children with the support to which they are entitled.
When the court determines that it is not appropriate to include irregular income in the determination of the child support obligation, the court should express its reasons. When the court determines that it is appropriate to include irregular income, an equitable method of treating such income may be to require the obligor to pay a fixed percentage of overtime, bonuses, etc., in child support on a periodic but predetermined basis (weekly, bi‑weekly, monthly, quarterly) rather than by the process of determining the average of the irregular income by past history and including it in the obligor's gross income calculation.
One method of treating irregular income is to determine the ratio of the basic child support obligation (line 4 of the worksheet) to the combined weekly adjusted income (line 3 of the worksheet) and apply this ratio to the irregular income during a fixed period. For example, if the basic obligation was $110.00 and the combined income was $650.00, the ratio would be .169 ($110.00 / $650.00). The order of the court would then require the obligor to make a lump sum payment of .169 of the obligor's irregular income received during the fixed period.
The use of this ratio will not result in an exact calculation of support paid on a weekly basis. It will result in an overstatement of the additional support due, and particularly so when average irregular income exceeds $250.00 per week or exceeds 75% of the regular adjusted Weekly Gross Income. In these latter cases the obligor may seek to have the irregular income calculation redetermined by the court.
Another form of irregular income may exist when an obligor takes a part‑time job for the purpose of meeting financial obligations arising from a subsequent marriage, or other circumstances. Modification of the support order to include this income or any portion of it may require that the obligor continue with that employment just to meet an increased support obligation, resulting in a disincentive to work.
Judges and practitioners should be innovative in finding ways to include income that would have benefited the family had it remained intact, but be receptive to deviations where reasons justify them. The foregoing discussion should not be interpreted to exclude consideration of irregular income of the custodial parent.
c. Potential Income. Potential income may be determined if a parent has no income, or only means‑tested income, and is capable of earning income or capable of earning more. Obviously, a great deal of discretion will have to be used in this determination. One purpose of potential income is to discourage a parent from taking a lower paying job to avoid the payment of significant support. Another purpose is to fairly allocate the support obligation when one parent remarries and, because of the income of the new spouse, chooses not to be employed. However, attributing potential income that results in an unrealistic child support obligation may cause the accumulation of an excessive arrearage, and be contrary to the best interests of the child(ren). Research shows that on average more noncustodial parental involvement is associated with greater child educational attainment and lower juvenile delinquency. Ordering support for low-income parents at levels they can reasonably pay may improve noncustodial parent-child contact; and in turn, the outcomes for their children. The six examples which follow illustrate some of the considerations affecting attributing potential income to an unemployed or underemployed parent.
(1) When a custodial parent with young children at home has no significant skills or education and is unemployed, he or she may not be capable of entering the work force and earning enough to even cover the cost of child care. Hence, it may be inappropriate to attribute any potential income to that parent. It is not the intention of the Guidelines to force all custodial parents into the work force. Therefore, discretion must be exercised on an individual case basis to determine if it is fair under the circumstances to attribute potential income to a particular nonworking or underemployed custodial parent. The need for a custodial parent to contribute to the financial support of a child must be carefully balanced against the need for the parent's full‑time presence in the home.
(2) When a parent has some history of working and is capable of entering the work force, but without just cause voluntarily fails or refuses to work or to be employed in a capacity in keeping with his or her capabilities, such a parent's potential income shall be included in the gross income of that parent. The amount to be attributed as potential income in such a case may be the amount that the evidence demonstrates he or she was capable of earning in the past. If for example the custodial parent had been a nurse or a licensed engineer, it may be unreasonable to determine his or her potential at the minimum wage level. Discretion must be exercised on an individual case basis to determine whether under the circumstances there is just cause to attribute potential income to a particular unemployed or underemployed parent.
(3) Even though an unemployed parent has never worked before, potential income should be considered for that parent if he or she voluntarily remains unemployed without justification. Absent any other evidence of potential earnings of such a parent, the federal minimum wage should be used in calculating potential income for that parent. However, the court should not add child care expense that is not actually incurred.
(4) When a parent is unemployed by reason of involuntary layoff or job termination, it still may be appropriate to include an amount in gross income representing that parent's potential income. If the involuntary layoff can be reasonably expected to be brief, potential income should be used at or near that parent's historical earning level. If the involuntary layoff will be extensive in duration, potential income may be determined based upon such factors as the parent's unemployment compensation, job capabilities, education and whether other employment is available. Potential income equivalent to the federal minimum wage may be attributed to that parent.
(5) When a parent is unable to obtain employment because that parent suffers from debilitating mental illness, a debilitating health issue, or is caring for a disabled child, it may be inappropriate to attribute any potential income to that parent.
(6) When a parent is incarcerated and has no assets or other source of income, potential income should not be attributed.
d. Imputing Income. Whether or not income should be imputed to a parent whose living expenses have been substantially reduced due to financial resources other than the parent's own earning capabilities is also a fact‑sensitive situation requiring careful consideration of the evidence in each case. It may be inappropriate to include as gross income occasional gifts received. However, regular and continuing payments made by a family member, subsequent spouse, roommate or live‑in friend that reduce the parent's costs for rent, utilities, or groceries, may be the basis for imputing income. If there were specific living expenses being paid by a parent which are now being regularly and continually paid by that parent’s current spouse or a third party, the assumed expenses may be considered imputed income to the parent receiving the benefit. The marriage of a parent to a spouse with sufficient affluence to obviate the necessity for the parent to work may give rise to a situation where either potential income or imputed income or both should be considered in arriving at gross income.
e. Return from Individual Retirement Accounts and other retirement plans. The annual return of an IRA, 401(K) or other retirement plan that is automatically reinvested does not constitute income. Where previous withdrawals from the IRA or 401(K) have been made to fund the parent’s lifestyle choices or living expenses, these withdrawals may be considered ”actual income” when calculating the parent’s child support obligation. The withdrawals must have been received by the parent and immediately available for his or her use. The court should consider whether the early withdrawal was used to reduce the parent’s current living expenses, whether it was utilized to satisfy on-going financial obligations, and whether the sums are immediately available to the parent. This is a fact-sensitive situation. Retirement funds which were in existence at the time of a dissolution and which were the subject of the property division would not be considered “income” when calculating child support.
1. Submitting Worksheet to Court. In all cases, a copy of the worksheet which accompanies these Guidelines shall be completed and filed with the court when the court is asked to order support. This includes cases in which agreed orders are submitted. Worksheets shall be signed by both parties, not their counsel, under penalties for perjury.
2. Documenting Income. Income statements of the parents shall be verified with documentation of both current and past income. Suitable documentation of current earnings includes paystubs, employer statements, or receipts and expenses if self‑employed. Documentation of income may be supplemented with copies of tax returns.
1. Worksheet Requirement. Submission of the worksheet became a requirement in 1989 when use of the Guidelines became mandatory. The Family Support Act of 1988 requires that a written finding be made when establishing support. In Indiana, this is accomplished by submission of a child support worksheet. The worksheet memorializes the basis upon which the support order is established. Failure to submit a completed child support worksheet may, in the court’s discretion, result in the court refusing to approve a child support order or result in a continuance of a hearing regarding child support until a completed worksheet is provided. At subsequent modification hearings the court will then have the ability to accurately determine the income claimed by each party at the time of the prior hearing.
If the parties disagree on their respective gross incomes, the court shall include in its order the gross income it determines for each party. When the court deviates from the Guideline amount, the order or decree should also include the reason or reasons for deviation. This information becomes the starting point to determine whether or not a substantial and continuing change of circumstance occurs in the future.
2. Verification of Income. The requirement of income verification is not a change in the law but merely a suggestion to judges that they take care in determining the income of each party. One pay stub standing alone can be very misleading, as can other forms of documentation. This is particularly true for salesmen, professionals and others who receive commissions or bonuses, or others who have the ability to defer payments, thereby distorting the true picture of their income in the short term. When in doubt, it is suggested that income tax returns for the last two or three years be reviewed.
After Weekly Gross Income is determined, certain reductions are allowed in computing weekly adjusted income which is the amount on which child support is based. These reductions are specified below.
1. Adjustment for Subsequent-born or Legally Adopted Child(ren) (Line 1A of Worksheet). T here shall be an adjustment to Weekly Gross Income of parents who have a legal duty or court order to support children (1)born or legally adopted subsequent to the birthdates(s) of the child(ren) subject of the child support order and (2)that parent is actually meeting or paying that obligation.
2. Court Orders for Prior‑born Child(ren) (Line 1B of Worksheet). The amount(s) of any court order(s) for child support for prior‑born children shall be deducted from Weekly Gross Income. This should include court ordered post-secondary education expenses calculated on an annual basis divided by 52 weeks.
3. Legal Duty of Support for Prior‑born Child(ren) (Line 1C of Worksheet). Where a party has a legal support duty for the children born prior to the child(ren) for whom support is being established, not by court order, an amount reasonably necessary for such support actually paid, or funds actually expended shall be deducted from weekly gross income to arrive at weekly adjusted income. This deduction is not allowed for step‑children. (See line 1C of worksheet)
4. Alimony or Maintenance (Line 1D of Worksheet). The amount(s) of alimony ordered in decrees from foreign jurisdictions or maintenance should be deducted from Weekly Gross Income.
Determining Weekly Adjusted Income. After Weekly Gross Income is determined, the next step is to compute weekly adjusted income (Line 1E of the Worksheet). Certain deductions, discussed below, are allowed from Weekly Gross Income in arriving at weekly adjusted income.
1. Adjustment of Weekly Gross Income for Subsequent Child(ren). The adjustment should be computed as follows:
STEP 1: Determine the number of children born or legally adopted by the parents subsequent to the birthdate(s) of the child(ren) subject of the child support order and for whom the parent has a legal duty or court order to support. The parent seeking the adjustment has the burden to prove the support is actually paid if the subsequent child does not live in the respective parent’s household.
STEP 2: Calculate the subsequent child credit by multiplying the parent’s Weekly Gross Income by the appropriate factor listed in the table below and enter the product on Line 1A on the Worksheet.
1 Subsequent child .065
2 Subsequent children .097
3 Subsequent children .122
4 Subsequent children .137
5 Subsequent children .146
6 Subsequent children .155
7 Subsequent children .164
8 Subsequent children .173
EXAMPLE: A noncustodial parent has a Weekly Gross Income, before adjustment, of $500.00. The custodial parent has a Weekly Gross Income, before adjustment, of $300.00. An adjustment shall be made to the parents’ respective Weekly Gross Incomes for the two (2) children born to the noncustodial parent after the birthdates(s) of the child(ren) subject of the child support order and the one (1) adopted child of the custodial parent, legally adopted after the birthdate(s) of the child(ren) subject of the child support order. The respective subsequent child adjustment to be entered on Line 1A of the Worksheet would be as follows:
Noncustodial………….$500.00 x .097 = $48.50 adjustment
Custodial……………. $300.00 x .065 = $19.50 adjustment
2. Legal Duty to Support for Prior-born Children. A deduction is allowed for support actually paid, or funds actually expended, for the children born prior to the children for whom support is being established. This is true even though that obligation has not been reduced to a court order. The party seeking the deduction bears the burden of proving the obligation and satisfaction of the obligation.
A parent should be permitted to deduct his or her portion of the support obligation for prior‑born children living in his or her home. It is recommended that these guidelines be used to compute a deduction from weekly gross income.
3. Alimony or Maintenance. The final allowable deduction from Weekly Gross Income in arriving at weekly adjusted income is for alimony ordered in decrees from foreign jurisdictions or spousal maintenance. These amounts are allowable only if they arise as the result of a court order. This deduction is intended only for spousal maintenance, not for periodic payments from a property settlement although the court may consider periodic payments when determining whether or not to deviate from the guideline amount when ordering support. Refer to the discussion of temporary maintenance earlier in this commentary. (Line 1D of Worksheet).
The Basic Child Support Obligation should be determined using the attached Guideline Schedules for Weekly Support Payments. For combined weekly adjusted income amounts falling between amounts shown in the schedule, basic child support amounts should be rounded to the nearest amount. The number of children refers to children for whom the parents share joint legal responsibility and for whom support is being sought, excluding children for whom Section Two of the Post‑Secondary Education Worksheet is used to determine support.
Use of Guideline Schedules.
Combined Weekly Adjusted Income. After reducing Weekly Gross Income by the deductions allowed above, weekly adjusted income is computed. The next step is to add the weekly adjusted income of both parties and take the combined weekly adjusted income to the Guideline schedules for weekly support payments. In selecting the appropriate column for the determination of the basic child support obligation, it should be remembered that the number of children refers only to the number of children of this marriage for whom support is being computed, excluding children for whom a Post‑Secondary Education Worksheet is used to determine support.
E. Additions to the Basic Child Support Obligation.
1. Work‑Related Child Care Expense (Worksheet Line 4A). Child care costs incurred due to employment or job search of both parent(s) should be added to the basic obligation. It includes the separate cost of a sitter, day care, or like care of a child or children while the parent works or actively seeks employment. Such child care costs must be reasonable and should not exceed the level required to provide quality care for the children. Continuity of child care should be considered. Child care costs required for active job searches are allowable on the same basis as costs required in connection with employment.
The parent who contracts for the child care shall be responsible for the payment to the provider of the child care. For the purpose of designating this expense on the Child Support Obligation Worksheet (Line 4A), each parent’s expense shall be calculated on an annual basis divided by 52 weeks. The combined amount shall be added to the Basic Child Support Obligation and each parent shall receive a credit equal to the expense incurred by that parent as an Adjustment (Line 7 of the Worksheet).
When potential income is attributed to a party, the court should not also attribute work-related child care expense which is not actually incurred.
2. Cost of Health Insurance for Child(ren) (Worksheet Line 4B). The weekly cost of health insurance premiums for the child(ren) should be added to the basic obligation whenever either parent actually incurs the premium expense or a portion of such expense. (Please refer to Guideline 7 for additional information regarding the treatment of Health Care Expenses)
3. Extraordinary Health Care Expense. Please refer to Support Guideline 7 for treatment of this issue.
4. Extraordinary Educational Expense. Please refer to Support Guideline 8 for treatment of this issue.
Additions to the Basic Child Support Obligation.
1. Work‑Related Child Care Expense (Worksheet Line 4A). One of the additions to the basic child support obligation is a reasonable child care expense incurred due to employment, or an attempt to find employment. This amount is added to the basic child support obligation in arriving at the total child support obligation.
Work‑related child care expense is an income‑producing expense of the parent. Presumably, if the family remained intact, the parents would treat child care as a necessary cost of the family attributable to the children when both parents work. Therefore, the expense is one that is incurred for the benefit of the child(ren) which the parents should share.
In circumstances where a parent claims the work‑related child care credit for tax purposes, it would be appropriate to reduce the amount claimed as work‑related child care expense by the amount of tax saving to the parent. The exact amount of the credit may not be known at the time support is set, but counsel should be able to make a rough calculation as to its effect.
When potential income is attributed to a party, the court should not also attribute a work-related child care expense which is not actually incurred because this expense is highly speculative and difficult to adequately verify.
2. Cost of Health Insurance for Child(ren) (Worksheet Line 4B). The weekly costs of health insurance premiums only for the child(ren) should be added to the basic obligation so as to apportion that cost between the parents. The parent who actually pays that cost then receives a credit towards his or her child support obligation on Line 7 of the Worksheet. (See Support Guideline 3G. Adjustments to Parent's Child Support Obligation). Only that portion of the cost actually paid by a parent is added to the basic obligation. If coverage is provided without cost to the parent(s), then zero should be entered as the amount. If health insurance coverage is provided through an employer, only the child(ren)'s portion should be added. In determining the amount to be added, only the amount of the insurance cost attributable to the child(ren) subject of the child support order shall be included, such as the difference between the cost of insuring a single party versus the cost of family coverage. In circumstances where coverage is applicable to persons other than the child(ren) subject of the child support order, such as other child(ren) and/or a subsequent spouse, the total cost of the insurance premium shall be prorated by the number of persons covered to determine a per person cost.
3. Total Child Support Obligation (Worksheet Line 5). Adding work‑related child care costs, and the weekly cost of health insurance premiums for the child(ren) to the basic child support obligation results in a figure called Total Child Support Obligation. This is the basic obligation of both parents for the support of the child(ren) of the marriage, or approximately what it would cost to support the child(ren) in an intact household, excluding extraordinary health care and/or extraordinary education expenses.
Each parent's child support obligation is determined by multiplying his or her percentage share of total weekly adjusted income (Worksheet Line 2) times the Total Child Support Obligation (Worksheet Line 5).
1. Division of Obligation Between Parents (Worksheet Line 6). The total child support obligation is divided between the parents in proportion to their weekly adjusted income. A monetary obligation is computed for each parent. The custodial parent’s share is presumed to be spent directly on the child. When there is near equal parenting time, and the custodial parent has significantly higher income than the noncustodial parent, application of the parenting time credit should result in an order for the child support to be paid from a custodial parent to a noncustodial parent, absent grounds for a deviation.
2. Deviation from Guideline Amount. If, after consideration of the factors contained in IC 31̴&;16‑6‑1 and IC 31̴&;16‑6‑2, the court finds that the Guideline amount is unjust or inappropriate in a particular case, the court shall state a factual basis for the deviation and proceed to enter a support amount that is deemed appropriate.
Computation of Child Support.
1. Apportionment of Support Between Parents. After the total child support obligation is determined, it is necessary to apportion that obligation between the parents based on their respective weekly adjusted incomes. First, a percentage is formed by dividing the weekly adjusted income of each parent by the total weekly adjusted income (Line 1E of the Worksheet). The percentages are entered on Line 2 of the Worksheet. The total child support obligation is then multiplied by the percentages on Line 2 (the percentage of total weekly adjusted income that the weekly adjusted income of each parent represents) and the resulting figure is the child support obligation of each parent. The noncustodial parent is ordered to pay his or her proportionate share of support as calculated on Line 6 of the Worksheet. Custodial parents are presumed to be meeting their obligations by direct expenditures on behalf of the child, so a support order is not entered against the custodial parent.
2. Apportionment of Support When Incapacitated Adult Child has Earned Income. Under certain circumstances the earned income of a child may be considered in apportioning support. In calculating a support obligation with respect to an incapacitated adult child with earned income, the support obligation may be determined by apportioning the support based upon the relative amount earned by the parents and the child.
3. Deviation from Guideline Amount. If the court determines that the Guideline amount is unjust or inappropriate, a written finding shall be made setting forth the factual basis for deviation from the Guideline amount. A simple finding such as the following is sufficient: "The court finds that the presumptive amount of support calculated under the Guidelines has been rebutted for the following reasons." A pro forma finding that the Guidelines are not appropriate does not satisfy the requirement for a specific finding of inappropriateness in a particular case, which is required in an order to deviate from the Guideline amount. For further discussion of deviation from the Guideline amount, see also the Commentary to Support Guideline 1.
The parent's child support obligation (Worksheet Line 7) may be subject to four (4) adjustments.
1. Obligation from Post‑Secondary Education Worksheet. If the parents have a child who is living away from home while attending school, his or her child support obligation will reflect the adjustment found on Line J of the Post‑Secondary Education Worksheet (See Support Guideline 8).
2. Weekly Cost of Work-related Child Care Expenses. A parent who pays a weekly child care expense should receive a credit towards his or her child support obligation. This credit is entered on the space provided on the Worksheet Line 7. The total credits claimed by the parents must equal the total amount on Line 4A. (See Support Guideline 3E Commentary).
3. Weekly Cost of Health Insurance Premiums for Child(ren). The parent who pays the weekly premium cost for the child(ren)'s health insurance should receive a credit towards his or her child support obligation in most circumstances. This credit is entered on the space provided on the Worksheet Line 7 and will be in an amount equal to that entered on the Worksheet Line 4B (See Support Guideline 3E Commentary).
4. Parenting Time Credit. The court should grant a credit toward the total amount of calculated child support for either “duplicated” or “transferred” expenses incurred by the noncustodial parent. The proper allocation of these expenses between the parents shall be based on the calculation from a Parenting Time Credit Worksheet. (See Support Guideline 6 Commentary).
a. Current Support Obligation
1. Custodial parent: Social Security benefits received for a child based upon the disability of the custodial parent are not a credit toward the child support obligation of the noncustodial parent. The amount of the benefit is included in the custodial parent’s income for the purpose of calculating the child support obligation, and the benefit is also a credit toward the custodial parent’s child support obligation.
2. Noncustodial parent: Social Security benefits received by a custodial parent, as representative payee of the child, based upon the earnings or disability of the noncustodial parent shall be considered as a credit to satisfy the noncustodial parent’s child support obligation as follows:
i. Social Security Retirement benefits may, at the court’s discretion, be credited to the noncustodial parent’s current child support obligation. The credit is not automatic. The presence of Social Security Retirement benefits is merely one factor for the court to consider in determining the child support obligation or modification of the obligation. Stultz v. Stultz, 659 N.E.2d 125 (Ind. 1995).
ii. Social Security Disability benefits shall be included in the Weekly Gross Income of the noncustodial parent and applied as a credit to the noncustodial parent’s current child support obligation. The credit is automatic.
iii. Any portion of the benefit that exceeds the child support obligation shall be considered a gratuity for the benefit of the child(ren), unless there is an arrearage.
3. The filing of a petition to modify on grounds a Social Security Disability determination has been requested will not relieve the parent’s obligation to pay the current support order while the disability application is pending. Filing of the petition to modify support may entitle the noncustodial parent to a retroactive reduction in support to the date of filing of the petition for modification and not the date of filing for the benefits. If the modification of support is granted, any lump sum payment of retroactive Social Security Disability benefits paid shall be credited toward the modified support obligation.
1. Credit for retroactive lump sum payment. A lump sum payment of retroactive Social Security Disability benefits shall be applied as a credit against an existing child support arrearage if the custodial parent, as representative payee, received a lump sum retroactive payment, without the requirement of a filing of a Petition to Modify Child Support. However, no credit should be allowed under the following circumstances:
i. A custodial parent should never be required to pay restitution to a disabled noncustodial parent for lump sum retroactive Social Security Disability benefits which exceed the amount of “court-ordered” child support. Any portion of lump sum payments of retroactive Social Security Disability benefits paid to children not credited against the existing child support arrearage is properly treated as a gratuity to the children. No credit toward future support should be granted.
ii. No credit shall be given for a lump sum disability payment paid directly to a child who is over the age of eighteen (18). The dependency benefits paid directly to a child who has reached the age of majority under the Social Security law, rather than to the custodial parent, as representative payee, do not fulfill the obligations of court-ordered child support.
2. Application of current Social Security Disability benefits. The amount of the benefit which exceeds the child support order may be treated as an ongoing credit toward an existing arrearage.
3. In Title IV-D cases there is no credit toward the monies owed to the State of Indiana unless the retroactive benefit is actually paid to the State of Indiana. The child’s Social Security benefits received and used by the custodial parent will not reduce or be credited against the noncustodial parent's obligation to reimburse the State of Indiana for Title IV-A or Title IV-E benefits previously paid on behalf of the children.
4. Modification. The award of Social Security Disability benefits retroactive to a specific date does not modify a noncustodial parent’s child support obligation to the same date. The noncustodial parent’s duty to pay support cannot be retroactively modified earlier than the filing date of a petition to modify child support. IC 31-16-16-6.
It is important to remember the amount of the child’s Social Security benefits that exceed the current child support order will not be reflected in ISETS as a credit toward an existing arrearage unless specified in the court order. Unless the credit is recognized in ISETS, there is a chance that an arrearage notice may be issued administratively and sanctions could be entered on that arrearage.
Social Security benefits paid to a parent for the benefit of a minor child are included in the disabled parent’s Gross Weekly Income for purposes of determining child support regardless of which parent actually receives the payment. (See Guideline 3A). This section, 3G and its commentary, address adjustments to the recommended child support obligation. Although Social Security benefits are not reflected on Line 7 of the child support Worksheet, the benefit should be considered, and its effect and application shall be included in the written order for support of that child.
The Guidelines make no change in the law regarding an adjustment for Social Security Retirement benefits or Supplemental Security Income (SSI). The court has discretion to allow an adjustment to a parent’s child support obligation based on the amount of Social Security Retirement benefits paid for the benefit of the child due to that parent’s retirement. The retirement benefit is merely one of the factors that the court should consider when making an adjustment to the child support obligation. SSI is a means-tested program and the benefit is not included in either parent’s gross income. It therefore should not be considered an adjustment to either parent’s child support obligation.
In Brown v. Brown, 849 N.E.2d 610 (Ind. 2006), Social Security Disability (SSD)benefits paid to a child were clearly recognized as earnings of the disabled parent. Id. at 614. Social Security Disability benefits paid for a child are recognized as income of the disabled parent who earned the benefits and those benefits are included in the Weekly Gross Income of that parent. See Guideline 3A. It follows then that the payment received for the benefit of the child should be applied to satisfy the disabled parent’s support obligation. The child support order should state that the SSD benefit received for the child is credited as payment toward the support obligation. Any portion of the SSD benefit in excess of the current support obligation is a gratuity, unless there is an arrearage.
The language in Guideline 3.G.5.b.2. directs that the excess SSD benefit may be applied as payment toward an existing arrearage. Once the arrearage is satisfied, any portion of the SSD benefit that exceeds the current support obligation is considered a gratuity. The Guidelines also change the application of a lump sum SSD payment. SSD is, by definition, a substitution for a person’s income lost due to a recognized disability. Further, under the Social Security Act, that individual may be entitled to a lump sum benefit retroactive to the date that his or her disability occurred and that caused the disruption in earnings. This lump sum payment is unique to SSD. The Guidelines now allow the courts to apply the lump sum SSD benefits toward an existing child support arrearage if the custodial parent, as representative payee, receives a lump sum payment. This credit is appropriate without the requirement of a filing of a Petition to Modify Child Support.
The Guidelines change the law regarding the application of SSD benefits. The holding in Hieston v. State, 885 N.E.2d 59 (Ind. Ct. App. 2008) and its progeny has been superseded by this change. The rationale is that the lump sum payment is merely a method of payment applied to a past support obligation not paid. The distinction is between modification of support which changes the rate of support, e.g. from $100.00 per week to $50.00 per week, as opposed to credit for an indirect payment. Modification of a child support obligation still requires the filing of a petition for modification as set forth in Guideline 4.
The lump sum payment is a method of payment that may not be specifically authorized by express court order but which should be recognized as a payment of support. Indiana case law establishes that credit can be allowed for payments that do not technically conform to the original support decree. For example, where the obligated parent makes payments directly to the custodial parent rather than through the clerk of the court, the Supreme Court has recognized these payments when there was sufficient proof to convince a trier of fact that the required payments were actually made. O'Neil v. O'Neil, 535 N.E.2d 523 (Ind. 1989), Nill v. Martin, 686 N.E.2d 116 (Ind. 1997). Proof of the lump sum SSD benefit payment is not difficult because the Social Security award certificate is a record easily admitted into evidence as an exception to the hearsay rule under IRE 803(6) and (8) (reports of a public agency setting forth its regularly recorded activity) and trial courts are rarely burdened with an evidentiary dispute about what was paid, when or to whom, once the Social Security records are shared. By contrast, the informal arrangement disputes between parties to modify and reduce the actual amount of weekly support below that ordered in the divorce decree are actual attempts to retroactively modify the amount of support, which are prohibited. Similar to the nonconforming payment, the lump sum payment shall be applied as a credit to an existing child support arrearage.
If there is no child support arrearage, the lump sum payment is considered gratuity. As long as there is an existing support order, there should never be an order entered that requires any excess payment of SSD or the lump sum payment to be paid back to the disabled parent.
The Guidelines exclude from the parent’s Weekly Gross Income any survivor benefits received by or for other children residing in either parent’s home based on the Social Security death benefits of a deceased parent of a prior-born child. See Commentary to Guideline 3(A).
GUIDELINE 4. MODIFICATION
The provisions of a child support order may be modified only if there is a substantial and continuing change of circumstances.
Substantial and Continuing Change of Circumstances. Before a child support order may be modified in Indiana, it is necessary for a party to demonstrate a substantial and continuing change in circumstances that makes the present order unreasonable or that the amount of support ordered at least twelve (12) months earlier differs from the Guideline amount presently computed by more than twenty percent (20%). See IC 31̴&;16‑8‑1 regarding dissolution of marriage actions or IC 31-14-11-8 regarding paternity actions. A change in circumstances may include a change in the income of the parents, the application of a parenting plan, the failure to comply with a parenting plan or a change in the expense of child rearing specifically considered in the Guidelines.
If the amount of support computed at the time of modification is significantly higher or significantly lower than that previously ordered and would require a drastic reduction in a parent’s standard of living, consideration may be given to phasing in the change in support. This approach would allow the parent affected by the change time to make adjustments in his or her standard of living. Again, it is not the intent of the Guidelines to drive the parents into noncompliance by reducing their spendable income below subsistence level.
Retroactive Modification. The modification of a support obligation may only relate back to the date the petition to modify was filed, and not an earlier date, subject to two exceptions: (1) when the parties have agreed to and carried out an alternative method of payment which substantially complies with the spirit of the decree; or (2) the obligated parent takes the child into the obligated parent’s home and assumes custody, provides necessities, and exercises parental control for a period of time that a permanent change of custody is exercised.
Emancipation: Support Orders for Two or More Children. In child support orders issued under these Guidelines, support amounts for two or more children, are stated as an in gross or total amount rather than on a per child basis. Absent judicial modification of the order, the total obligation will not decrease when the oldest child reaches nineteen (19) years of age, or the child is emancipated after the occurrence of other events. Parents should seek to modify child support orders when the legal obligation to pay child support terminates for any child or any child is emancipated. See Ind. Code § 31-16-6-6.
The concept of a pro rata delineation of support is generally inconsistent with the economic policy underlying the Guidelines (See "Economic Data Used in Developing Guidelines" in "Commentary9quot; to Support Guideline 1). That policy recognizes that the amount of support required for two children is about 1.5 times that required to support one child. The multiplication factor decreases as the number of children increases. If support were reduced by one half when the first of two children was emancipated, the remaining amount of support would be significantly below the Guideline amount for one child at the same parental income levels.
Parents should seek to modify or terminate a support order when a child(ren) becomes emancipated under Indiana law.
GUIDELINE 5. FEDERAL STATUTES
These Guidelines have been drafted in an attempt to comply with, and should be construed to conform with applicable federal statutes.
Every attempt was made to draft Guidelines for the State of Indiana that would comply with applicable federal statutes and regulations. Likewise, careful attention was paid to state law.
GUIDELINE 6. PARENTING TIME CREDIT
A credit should be awarded for the number of overnights each year that the child(ren) spend with the noncustodial parent.
Analysis of Support Guidelines . The Indiana Child Support Guidelines are based on the assumption the child(ren) live in one household with primary physical custody in one parent who undertakes all of the spending on behalf of the child(ren). There is a rebuttable presumption the support calculated from the Guideline support schedule is the correct amount of weekly child support to be awarded. The total amount of the anticipated average weekly spending is the Basic Child Support Obligation (Line 4 of the Worksheet).
The Guideline support schedules do not reflect the fact, however, when both parents exercise parenting time, out-of-pocket expenses will be incurred for the child(ren)’s care. These expenses were recognized previously by the application of a 10% visitation credit and a 50% abatement of child support during periods of extended visitation. The visitation credit was based on the regular exercise of alternate weekend visitation which is equivalent to approximately 14% of the annual overnights. With the adoption of the Indiana Parenting Time Guidelines, the noncustodial parent’s share of parenting time, if exercised, is equivalent to approximately 27% of the annual overnights. As a result, these revisions provide a parenting credit based upon the number of overnights with the noncustodial parent ranging from 52 overnights annually to equal parenting time. As parenting time increases, a proportionally larger increase in the credit will occur.
Analysis of Parenting Time Costs . An examination of the costs associated with the sharing of parenting time reveals two types of expenses are incurred by both parents, transferred and duplicated expenses. A third category of expenses is controlled expenses, such as the 6% uninsured health care expense that remains the sole obligation of the parent for whom the parenting time credit is not calculated. This latter category is assumed to be equal to 15% of the Basic Child Support Obligation.
Transferred Expenses. This type of expense is incurred only when the child(ren) reside(s) with a parent and these expenses are “transferred” with the child(ren) as they move from one parent’s residence to the other. Examples of this type of expense are food and the major portion of spending for transportation. When spending is transferred from one parent to the other parent, the other parent should be given a credit against that parent’s child support obligation since this type of expense is included in the support calculation schedules. When parents equally share in the parenting, an assumption is made that 35% of the Basic Child Support Obligation reflects “transferred” expenses. The amount of expenses transferred from one parent to the other will depend upon the number of overnights the child(ren) spend(s) with each parent.
Duplicated Fixed Expenses. This type of expense is incurred when two households are maintained for the child(ren). An example of this type of expense is shelter costs which are not transferred when the child(ren) move(s) from one parent’s residence to the other but remain fixed in each parent’s household and represent duplicated expenditures. The fixed expense of the parent who has primary physical custody is included in the Guideline support schedules. However, the fixed expense of the other parent is not included in the support schedules but represents an increase in the total cost of raising the child(ren) attributed to the parenting time plan. Both parents should share in these additional costs.
When parents equally share in the parenting, an assumption is made that 50% of the Basic Child Support Obligation will be “duplicated.” When the child(ren) spend(s) less time with one parent, the percentage of duplicated expenses will decline.
Controlled Expenses . This type of expense for the child(ren) is typically paid by the custodial parent and is not transferred or duplicated. Controlled expenses are items like clothing, education, school books and supplies, ordinary uninsured health care and personal care. For example, the custodial parent buys a winter coat for the child. The noncustodial parent will not buy another one. The custodial parent controls this type of expense. “Education” expenses include ordinary costs assessed to all students, such as textbook rental, laboratory fees, and lunches, which should be paid by the custodial parent. The cost of participating in elective school activities such as sports, performing arts and clubs, as well as related extracurricular activities are “optional” activities covered by the paragraph on “Other Extraordinary Expenses” in Guideline 8.
The controlled expenses account for 15% of the cost of raising the child. The parenting time credit is based on the more time the parents share, the more expenses are duplicated and transferred. The controlled expenses are not shared and remain with the parent that does not get the parenting time credit. Controlled expenses are generally not a consideration unless there is equal parenting time. These categories of expenses are not pertinent for litigation. They are presented only to explain the factors used in developing the parenting time credit formula. The percentages were assigned to these categories after considering the treatment of joint custody by other states and examining published data from the Bureau of Labor Statistics’ Consumer Expenditure Survey.
Computation of Parenting Time Credit . The computation of the parenting time credit will require a determination of the annual number of overnights of parenting time exercised by the parent who is to pay child support, the use of the standard Child Support Obligation Worksheet, a Parenting Time Table, and a Parenting Time Credit Worksheet.
An overnight will not always translate into a twenty-four hour block of time with all of the attendant costs and responsibilities. It should include, however, the costs of feeding and transporting the child, attending to school work and the like. Merely providing a child with a place to sleep in order to obtain a credit is prohibited.
The Parenting Time Table (Table PT) begins at 52 overnights annually or the equivalent of alternate weekends of parenting time only. If the parenting plan is for fewer overnights because the child is an infant or toddler (Section II A of the Parenting Time Guidelines), the court may consider granting the noncustodial parent an appropriate credit for the expenses incurred when caring for the child. If the parenting plan is for fewer overnights due to a significant geographical distance between the parties, the court may consider granting an appropriate credit. The actual cost of transportation should be treated as a separate issue.
If the parents are using the Parenting Time Guidelines without extending the weeknight period into an overnight, the noncustodial parent will be exercising approximately 96-100 overnights. The actual number of overnights may vary based on differing school calendars.
Parenting Time Table . The TOTAL column represents the anticipated total out-of-pocket expenses expressed as a percentage of the Basic Child Support Obligation that will be incurred by the parent who will pay child support. The total expenses are the sum of transferred and duplicated expenses. The DUPLICATED column represents the duplicated expenses and reflects the assumption that when there is an equal sharing of parenting time, 50% of the Basic Child Support Obligation will be duplicated. The Number of Annual Overnights column will determine the particular fractions of TOTAL and DUPLICATED to be used in the Parenting Time Credit Worksheet.