Are you considering obtaining a California family support order in divorce? Opting for a family support order may be in your best financial interest if you or your spouse may be subject to paying or receiving both child and spousal support. Read on to learn the difference between child support, spousal support and family support orders, and how A People’s Choice can help you get a California family support order in divorce.
California Family Support vs Child Support
A California family support order in divorce consists of child support and spousal support. Under a family support order, child and spousal support are combined into one payment. There is no distinction made within the court order about how much money is allocated to child or spousal support.
“Family support” means an agreement between the parents, or an order or judgment, that combines child support and spousal support without designating the amount to be paid for child support and the amount to be paid for spousal support.
A separate order for child or spousal support will not be issued if the court grants a family support order.
How is a California Family Support Order Calculated?
The amount of family support a parent will receive and/or pay depends on the amount he/she is ordered to pay for child support and spousal support. As mentioned above, the court will combine both orders into one and make any necessary adjustments. California law requires courts to follow statewide guidelines when establishing support orders; however, both parents can always reach their own agreement about a child support, spousal support or family support order. When setting a family support order, it is important to keep in mind that the agreed upon amount of a family support order must be more than the standard California guidelines child support amount.
Tax Consequences of Child Support
Child support is considered tax-free income for the person receiving the child support for federal income tax purposes. Neither the receiving party nor the child is required to pay income taxes on the amount received. On the other hand, the party paying the support cannot deduct these child support payments on their tax returns. Child support payments are not tax deductible by the party paying the child support under state or federal law.
Tax Consequences of Family Support
One hundred percent of payments made under a California family support order in divorce are potentially deductible by the payee. Furthermore, payments made under a California family support order in divorce are also reportable as taxable income by the recipient. This is because family support in a divorce is an unallocated award of spousal and child support. This means there is no designated amount of family support that is specifically attributable as being “child support” payable to the receiving party.
In order for family support to be tax deductible, it must not be disguised as child support. The payment of family support cannot be tied to any child related event, meaning, for example, that payment terminates when a child reaches the age of 18.
Tax Consequences of Spousal Support
Spousal support payments are tax deductible by the person who is paying the spousal support and are considered taxable income for the party receiving the payments. Spousal support is generally considered to be tax deductible under both state and federal law.
Factors to Consider When Agreeing to Family Support
If the supporting spouse has little to no income, that person may pay little or no taxes on family support. Depending on the supported spouse’s income, he/she may want to negotiate with the paying spouse the amount of family support instead of separate child and spousal support. Payments made as family support will be tax deductible, whereas payments made as child support will not. Although the supporting spouse must claim the support payments as income, if their income is low, claiming this income for tax purposes may not necessarily have a negative impact on their end-of-year tax liability. This may be enough incentive for the parties to negotiate a family support amount in the event the receiving spouse is not concerned about reducing his/her income tax.
In regard to the paying spouse, since child support is not tax deductible, he/she may want to consider paying a family support order because of the income tax benefits. By paying family support, the total amount of family support can be deducted for income tax purposes. This is highly beneficial to a spouse who may be responsible to pay both spousal and child support. While spousal support may be deducted, child support is not. A paying spouse can save thousands of dollars in income tax by combining child and spousal support in a California family support order in divorce.
A People’s Choice Helps With Family Support Orders
A People’s Choice has been providing document preparation services for family law and other types of cases for over 35 years. We can create a California Guideline Report based on the income of both parties. This report is used by the court when calculating child, spousal or family support orders. This report will provide the calculations for California guideline child support and spousal support, and show you the comparative amount of a family support order. This report will help you make an educated decision about how you structure your California family support order.