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California Child Support and High Net Worth Parents pt 4

Child Support Guidelines

 

In California, child support calculations are primarily governed by the statewide uniform child support guideline, which is established by state law (California Family Code §§ 4050-4076). The guideline is designed to ensure that child support orders are consistent and fair, taking into account the financial circumstances of both parents. Determining child support in California is a complex process that takes into account various factors to ensure that children receive the financial support they need to thrive.

 

The Statewide Uniform Guideline – The DissoMaster Formula

 

The DissoMaster formula is used in most cases and is published in the California Family Code § 4055. This formula is based on a complex algebraic equation that takes into account two basic factors – (1) the disparity of income between the parents; and (2) the disparity of timeshare. There is an online calculator the courts typically used to accurately calculate the child support obligation using the standard guideline. The basic formula is as follows:

 

CS = K[HN - (H%)(TN)]

 

In accordance with California Family Code § 4055 (b)(1), the components of the formula are as follows:

 

CS

child support amount

K

the percentage amount of both parents’ income to be allocated for child support

HN

high earner’s net monthly disposable income

H%

approximate percentage of time that the high earner has or will have primary physical responsibility for the children compared to the other parent. In cases in which parents have different time-sharing arrangements for different children, H% equals the average of the approximate percentages of time the high earner parent spends with each child.

TN

total net monthly disposable income of both parties.

 

 

Establishing Each Parent’s Income [K]

The value of "K" in the California child support calculation of "CS = K[HN - (H%)(TN)]" is determined by the number of children in the household. It is the percentage amount of both parents’ income to be allocated for child support. The value is the corresponding percentage established by the California Legislature and is based on studies of the cost of raising children. The Legislature determined that these values are necessary to ensure that children receive adequate financial support from both of their parents.

 

Number of children

1

2

3

4

5

6

7 or more

Percentage

25%

35%

50%

55%

60%

65%

70%

 

High Earner’s Net Monthly Disposable Income [HN]

“HN” represents the higher-earning parent's net monthly disposable income. It is the amount of money the higher-earning parent has left over after taxes and other deductions have been taken out of their gross income.

 

To determine the “HN” courts first identify the gross monthly income of the higher-earning parent which includes all wages, salaries, commissions, bonuses, tips, interest, dividends, and other forms of income. Next, the courts will subtract the following deductions from gross income to calculate net monthly disposable income: (1) Federal income taxes; (2) State income taxes; (3) FICA taxes; (4) Mandatory union dues; (5) Mandatory retirement contributions; (6) Court-ordered child support or alimony payments; and (7) Mandatory health insurance premiums. The resulting amount is the higher-earning parent's net monthly disposable income (HN).

 

Proportionate Time with Child(ren) [H%]

“H%” represents the percentage of time that the higher-earning parent has the children in their physical custody. It is calculated by dividing the number of nights that the higher-earning parent has the children by the total number of nights in the month and multiplying by 100%. The H% is an important factor in the child support calculation because it reflects the fact that the higher-earning parent is responsible for a portion of the child care costs. By taking the H% into account, the child support calculation ensures that the higher-earning parent is paying a fair share of the total cost of raising the children.

 

Total Net Monthly Disposable Income of Both Parties [TN]

“TN” represents the total net monthly income of both parents. It is calculated by adding the net monthly disposable income of the higher-earning parent to the net monthly disposable income of the lower-earning parent which essentially is represented as a precalculation of “HN + LN = TN”, whereas the higher earners net monthly disposable income (“HN”) is added to the lower earners net monthly disposable income (“LN”) to calculate the total net monthly income of both parties.

 

The net monthly disposable income of the lower earner’s income is calculated using the same factors discussed supra when determining the “HN” in the calculation.

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