Even in the divorce mediation world, everyone is talking about the new law just passed by Congress – the American Rescue Plan Act of 2021 (ARP). It promises new and increased cash payments to many Americans. One part of the law includes more generous tax credits for children; and this new payment structure may have an impact on child support for divorced and divorcing parents.

Previously, depending on their income, parents received a tax credit of up to $2,000 per child. Under the ARP, this potential tax credit increases to $3,000 per child and $3,600 for children under 6 starting in 2021.  In addition, the IRS plans to estimate the amount of the child tax credits for the year for families and pay them out in monthly portions in advance beginning in July 2021. These increased tax credits may impact child support calculations going forward. 

Calculating child support is part of the divorce mediation process at Westfield Mediation, LLC. We calculate child support based on income and the number of nights each parent spends with the children, while also taking into account the payments parents make for health insurance premiums and/or child care. As part of the child support calculation, we determine which parent will be claiming the children as dependents for tax purposes. Sometimes, parents share these tax credits or alternate them over time. For our clients, we often run these numbers a few different ways to help them decide what is the best plan for them.

Divorced and divorcing parents may need to consult with their accountants to understand the impact of the new ARP laws on their taxes. In divorce mediation, we advise our clients to seek out the most up to date information available to help them make the best financial decisions for their family.

​For more information on divorce mediation, parenting plans and child support, please contact Randi M. Albert, JD, or Michelle Weinberg, M. Ed. Licensed Marriage and Family Therapist, at Westfield Mediation, LLC, at 908.913.0373.  View our website at www.westfieldnjmediation.com or email us at info@westfieldnjmediation.com
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I owe what???? I am only getting what???? Child support in New Jersey, what a mystery it can be to the casual observer. I often have clients find some type of child support calculator on the Internet, plug in their salaries and get a number.  Boy, are they shocked when I explain all the factors for child support and tell them the number they have from the Web is way off base, either too high or too low.  Child support guidelines are based on the expenses an average family (which does not exist in reality because no one is average) incurs to raise their children in New Jersey. 

So what are the factors to consider? It includes the income of both parents, taxes, amount of time spent with the kids, add-ons (child care, health insurance) and deductions (alimony, other child support obligations).  If one parent is not working but is able to work, the court figures out how much Mom/Dad is capable of earning and uses that number in the calculations.  While the courts cannot force you to work, they still consider your potential income.  Moreover, only required tax deductions count in the total, so the figure the court uses may not match your take-home pay.  Both parents calculated income is put into the pot.  Then you consider the number of children in the family and this will equal your basic child support award (total cost of raising your children). 

So why does only one person pay for child support?  There is still more to consider. This basic child support award is split in proportion to the incomes.  Say, Dad makes 60%; Mom makes 40% of the total income.  Not done yet. Also, the amount of time spent with the kids is a factor.  You are not expected to pay for 60% of the cost of food for the kids if you are already paying for 100% of their food during the time that they are with you.  See, it is complicated.  The add-ons like child care, and cost of health insurance for the children or deductions like alimony or child support from other relationships, make a difference in the bottom-line number.  Finally, the amount can also be influenced by when support starts.  Adolescents are more expensive than younger children.  If your child is a teenager when support starts, the amount can increase by as much as 14.6%.

After all these factors are considered, you are left with a final support order.  This is the amount that one parent pays to the other parent to help equalize the monies that both parents contribute to the cost of raising their children in two homes.  Both parents pay- yet, the money from one parent is not seen, so it may look like one parent pays 100% and the other parents pays 0%.  Take my advice—use a professional when figuring child support.  There are too many variables to consider for a simple calculator you found online to get it right.