Chat Live
Child support calculations in New York State will now be affected by the new temporary employee payroll tax cut, which is referred to as the Tax Relief Act of 2010 and became effective January 1, 2011. In addition to including a two-year extension of the Bush-era tax cuts for all income levels, this Act also temporarily reduces the Social Security tax withholding rate paid by employees to 4.2% from 6.2%. While many individuals will see an increase in their take home pay from the reduction, the change in withholding may actually mean that a parent may have to pay more in child support.
In New York, child support obligations are calculated according to the Child Support Standards Act (CSSA). Generally child support is paid by the parent who lives separate and apart from the child (i.e. the “non-custodial” parent) and paid to the other parent to help pay for the child’s living expenses. When determining how much the non-custodial parent will pay, the court must first determine each parent’s income. Next, the court deducts Social Security and Medicare withholding paid from that income to determine both parent’s adjusted income. Before 2011, parents’ income was multiplied by 7.65% (6.2% for Social Security and 1.45% for Medicare withholding) to reflect the amount deducted for calculating child support. Now, the parent’s income is multiplied by 5.65%, to account for the change from the Tax Relief Act. Once the court determines the parents’ adjusted income, the court will then multiply that income by a percentage, based on the number of children covered by child support.
For example, parents with two children will generally pay 25% of their combined income according to the CSSA. Assuming a non-custodial parent makes approximately $60,000 per year, that parent would have paid approximately $13,852 in child support for a child support order issued in 2010. That same parent would be required to pay $14,152 annually for a child support order issued in 2011 with this decrease in Social Security withholding. While an increase in support of $300 in 2011 may not be drastic for some, for parents with greater disparity of income, or for individuals with higher income, the decrease in Social Security withholding may have a substantial increase in child support owed for orders issued in 2011. However, one should note that Social Security withholding is only on the first $106,800 of income. This is referred to as the maximum taxable wage base, which is usually adjusted annually based on wage-level increases. Although the Social Security withholding ends at $106,800 in 2011, the Medicare tax of 1.45% continues to be applied to all earnings.
Since 1937, employees have had Social Security withholding held from their pay. This amount traditionally has been matched by the employer. Although there is a temporary decrease in the percentage withheld for Social Security taxes for employees, employers are still paying their share, or the full 6.2% of income, toward Social Security. The IRS has also noted that the Social Security tax break for 2011 will have no effect on future Social Security benefits, which are based on career earnings.
While no family hopes to find itself in this position, these proceedings can assist them in providing assistance and necessary services to the family member in need. We would be happy to provide assistance and advice to your family should you require it.
