1 Tennessees New Child Support Guidelines Income Shares

2 Purpose Captures actual child-rearing expenses at various levels of parental income and then pro- rates these expenses between both parents Requires consideration of the income of both parents –Allows child to share in the financial resources of both parents –Each parent is responsible for his/her pro-rata share of the child support obligation

3 Basic Concepts Custodial Parent is now referred to as the Primary Residential Parent (PRP) Non-Custodial Parent is now referred to as the Alternate Residential Parent (ARP) Two parenting situations –Standard – one PRP/ARP for all children –Split – two PRPs/ARPs for all children

4 Definitions PRP – the parent with whom the child resides more than 50% of the time ARP – the parent with whom the child resides less than 50% of the time

5 Definitions Standard Parenting – all children under the order have the same PRP and the same ARP Split Parenting – one parent is the PRP/ARP for at least one child under the order and the other parent is PRP/ARP for at least one other child under the order

6 Tools for Calculation of Support

7 Worksheets –Child Support Worksheet – to be used in all cases for calculation of the child support obligation –Credit Worksheet – to be used when calculating credits for a parents qualified other children –Worksheets are Excel - based and perform all necessary calculations –Calculation results on the Credit Worksheet are automatically transferred to the Child Support Worksheet

8 Tools for Calculation of Support Child Support Schedule – provides the child support obligation for various levels of parental income and number of children – always round up to the nearest increment of $50

9 Gross Income Calculations

10 Gross Income Calculations Gross Income –From all non-exempt sources – same is in current Guidelines –Both parents of the child – Do not consider income of a non-parent caretaker –No deductions for federal income taxes or FICA contributions, except for self-employed parents – these taxes are taken into consideration on the Child Support Schedule in each child support obligation

11 Gross Income Calculations –Willful and Voluntary (Under)Unemployment – Generally the same as in current Guidelines Determination now applies to both parents Applies to any intentional act of the parent –Imputed Income – $ 35,851 for males $ 26,450 for females From American Community Survey of 2002 for full time Tennessee workers

12 Gross Income Calculations Adjusted Gross Income (AGI) –Gross Income minus the following: Self-employment taxes paid by the parent Amounts paid on pre-existing child support orders Support provided to qualified other children of the parent –The AGI of each parent is combined to determine the percentage of income (PI) for each parent

13 Credits for Qualified Other Children

14 Credits for Qualified Other Children Other children – are those children not presently before the tribunal for the establishment or modification of a child support order Other children are qualified if: –The parent is legally responsible for the childs financial support –The parent is actually providing financial support to the child Credits are available to either parent

15 Definitions A person is legally responsible for a child if a child is - –Born of the persons body, –Born of the persons marriage, –The legally adopted child of the person; –Voluntarily acknowledged by the person, or –Otherwise determined to be the child of the person

16 Credits for Qualified Other Children Pre-existing support orders –Pre-existing determined from the date the order was initially entered –Credit allowed for the average monthly amount actually paid 12 months prior to hearing, up to the amount of the order –Does not include amounts paid on arrears

17 Credits for Qualified Other Children Children not subject of pre-existing child support orders –Credit available up to 75% of the amount of a theoretical order, using Income of the parent seeking the credit –Credit for self-employment taxes paid –No credit for pre-existing orders Number of qualified other children –Do not consider the income of or support provided by a childs other parent

18 Definitions Theoretical Order – –A hypothetical order which allows the finder of fact to determine the amount of a child support obligation if an order existed. –Used to determine the amount of credit allowed as a deduction from a parents gross income for a parents qualified other child who is not under a pre-existing child support order.

19 Credits for Qualified Other Children –In-Home Children Those qualified children who reside with the parent more than 50% of the time The amount of the credit allowed for these children is 75% of a theoretical order –Not-In-Home Children Total of all qualified children residing with the parent less than 50% of the time, without regard to the childs primary household The amount of the credit allowed for these children is the lesser of: –75% of a theoretical order –Support actually provided – established by documentary proof

20 Definitions Documentary proof of monetary support - –Physical evidence of monetary payments to the childs caretaker, such as canceled checks or money orders –Evidence of payment of child support under a subsequent child support order, such as a payment history from a tribunal clerk or child support office or from the Departments internet child support payment history –In kind remuneration such as food, clothing, formula, or diapers is not acceptable for this credit

21 Basic Child Support Obligation

22 Basic Child Support Obligation Amount of basic support to be provided by both parents is determined on the Child Support Schedule by cross-referencing the combined adjusted gross income (AGI) of both parents with the number of children for whom support is being calculated – amount does not include –Adjustments for additional expenses –Adjustments for parenting time –Adjustments for deviations –Uninsured medical expenses This amount is allocated between the parents according to the percentage of income (PI) of each parent

23 Definitions Percentage of Income (PI) – the PI for each parent is calculated by dividing each parents AGI by the combined AGI of both parents

24 Basic Child Support Obligation Standard Parenting – One BCSO –The combined gross income of both parents –The number of children for whom support is being calculated

25 Basic Child Support Obligation Split Parenting – A BCSO for each parent –Mothers BCSO The combined adjusted gross income for both parents The number of children for whom support is being calculated for whom the Father is the PRP The Mothers PI –Fathers BCSO The combined adjusted gross income for both parents The number of children for whom support is being calculated for whom the Mother is the PRP The Fathers PI

26 Policy Income Shares vs. the Flat Percentage –Economic studies reveal that, as income increases, the dollar amount spent on child- rearing expenses increases but the percentage of income spent on child-rearing expenses decreases –Accordingly, flat percentages have statistically been too low at lower incomes and too high at higher incomes

27 Policy Proportion of Net Income Spent on Children (based on Betson-Rothbarth Estimates) USA 2003 Dollars Percentage of Net Income Spent On… One ChildTwo ChildrenThree Children Less than $15, %38.20%44.70% $15,607 - $20, %38.02%44.47% $20,808 - $26, %37.41%43.67% $26,011 - $31, %36.83%42.90% $31,213 - $36, %36.36%42.25% $36,416 - $41, %35.86%41.56% $41,618 - $46, %33.59%38.87% $46,820 - $52, %31.92%36.88% $52,023 - $62, %30.14%34.81% $62,426 - $72, %26.26%30.33% $72,831 - $83, %25.69%29.59% $83,236 - $104, %23.80%27.30% $104,045 - $130, %21.42%24.45% $130, %18.56%21.06%

28 Definitions Parenting time adjustment - adjustment to the ARPs portion of the BCSO based upon the ARPs parenting time with the child

29 Basic Child Support Obligation Parenting Time Adjustment –Reduction to BCSO –Parenting time with the child greater than 120 days days = 10% reduction days = 20% reduction days = 30% reduction days = 40% reduction 182+ days = 50% reduction

30 Basic Child Support Obligation Parenting Time Adjustment –Increase to BCSO –Parenting time with child less than 54 days 53 – 39 days = 10% increase 38 – 24 days = 20% increase 23 – 9 days = 30% increase 8 – 0 days = 35% increase

31 Definitions Days – a parent gets credit for a day of parenting time if the child spends the majority of a 24 hour calendar day with or under the control of a parent and that parent expends a reasonable amount of resources on the child during this time period (such as the cost of a meal or other such costs directly related to the care and supervision of the child)

32 Treatment of Expenses

33 Treatment of Expenses Amounts actually paid by a parent or other caretaker Basic Expenses –Such as: Food Clothing Housing –Included in the BCSO

34 Treatment of Expenses Additional Expenses –Mandatory Expenses Childs healthcare premium –Expense attributable only to child for whom support is being calculated –Allocated according to parents PI –Added on to BCSO Work-related childcare –Projected over next 12 months and averaged for a monthly amount –Includes only amounts actually paid –Allocated according to parents PI –Added on to BCSO

35 Treatment of Expenses Uninsured Medical Expenses –No calculations on the Worksheet –Order shall provide for payment of expenses according to parents PI or as otherwise specified by the tribunal –Recurring amounts added to the Presumptive Child Support Order (PCSO)

36 Definitions medical expenses which include, but are not limited to, health insurance co-payments, deductibles, and such other costs as are reasonably necessary for orthodontia, dental treatment, asthma treatments, physical therapy, vision care, and any acute or chronic medical/health problem, or mental illness, including counseling or other medical or mental health expenses, that are not covered by insurance.Uninsured Medical Expenses - medical expenses which include, but are not limited to, health insurance co-payments, deductibles, and such other costs as are reasonably necessary for orthodontia, dental treatment, asthma treatments, physical therapy, vision care, and any acute or chronic medical/health problem, or mental illness, including counseling or other medical or mental health expenses, that are not covered by insurance.

37 Treatment of Expenses –Extraordinary Expenses May be added to the Presumptive Child Support Order as a deviation in the discretion of the tribunal Extraordinary Education Expenses Special Expenses - can be added to the BCSO when the expense exceeds 7% of the BCSO

Summary of Calculations Basic Child Support Obligation (BCSO) – –Obtained from the Child Support Schedule –Based on number of children and combined AGI of both parents Adjusted Support Obligation (ASO) –BCSO adjusted for parenting time, the health insurance premium, and child care

Summary of Calculations Presumptive Child Support Order (PCSO) –The ASO adjusted by the total amount of the health insurance premium and/or the work-related child care paid through payroll deduction; and/or –The ASO adjusted for the statutory threshold Final Child Support Order (FCSO) –The PCSO adjusted for deviations and uninsured medical expenses –In the absence of such adjustments, the PCSO is the FCSO

40 Child Support Order High-Income Threshold –Absent rebuttal, the PCSO is limited to the following amounts - $2100 for one child $3200 for two children $4100 for three children $4600 for four children $5000 for five children –With rebuttal, additional amounts may be added to the PCSO as a deviation –Also applicable to the calculation of a theoretical order

41 Child Support Order Deviations –Must consider the best interests of child for whom support is being calculated –Order shall include guideline amount and findings in support of deviation –Reasons Same as current Guidelines Extraordinary Expenses Rebuttal of high-income threshold Low income of either parent

42 Child Support Order Modifications –Generally require a significant variance –No significant variance needed if Providing for healthcare needs Eliminating a previous deviation due to a change in circumstances Retroactive Support – –From birth of the child or separation of the parties –Using Guidelines in effect at the time of the order

43 Modification

44 Modification After implementation of the Rules, a significant variance is - –At least a 15% change in the ARPs gross income - and/or –A change in the number of children for whom the ARP is legally responsible – and/or –The child for whom support is being calculated becoming disabled – and/or –The parties entering into an agreed order for modification of the support obligation in compliance with these Rules – and – –At least a 15% (or 7.5%) change in the support obligation –After January 1, 2006, a significant variance will be a 15% (or 7.5%) change in the support obligation –7.5% applies to low-income parents

45 Definitions Low-income parent – –a parent who, when working at his/her full capacity according to his/her education and experience and not willfully and voluntarily unemployed or underemployed, has adjusted gross income at or below the federal poverty level for a single adult –The federal poverty standards will be available at –Current amount is $9310 annual gross income

46 Modification Hardship Deviation - –When modifying an order under Income Shares that was established under the current Guidelines For the first modification, whenever it should occur Can be applied only one time –Can limit the amount of the modification if: Decrease would impair the household of the PRP Increase would impair the household of the ARP –Deviation cannot be used in a subsequent action to create a significant variance

47 Learning Tools Income Shares Tutorial on the Departments website – includes –All pertinent documents –A detailed walkthrough of a support calculation –Interactive examples –FAQs is/incomeshares.htm

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