It's A Two Way Street:
Do Alimony And Child Support Cancel Out?
Divorces can be complicated and you need to be prepared to handle all situations you might encounter. For example, what happens in a situation where one person is paying spousal support and receiving child support? Divorce Financials family attorney software provides the analysis tools you need to understand how each payment affects the other.
Spousal Support Vs. Child Support
As a rough rule of thumb, the spouse with the higher income will pay spousal support to the lower income spouse. There are of course various exceptions based on lifestyle, length of marriage and so on but commonly that is how spousal support is determined. On the other hand, the non-custodial parent will usually pay child support to the custodial parent even if the custodial parent makes more money.
In that case each parent is both paying money to and receiving money from the same person. One person is paying alimony but receiving child support, while the other is paying child support and receiving alimony. It may seem like an unnecessary complication and it is tempting to look for a shortcut to make things simpler for everyone.
Child Support Can't Cancel Out Alimony
Don't make the mistake of simply trading alimony and child support dollar for dollar. Let's say the custodial parent is paying $2000 in alimony and receiving $1200 in child support. It might seem logical to simply have the custodial parent pay $800 in alimony and call it square. This won't work because child support and spousal support probably don't end on the same day, so when one ends it will be necessary to renegotiate the other.
Another concern is that the IRS might have something to say about the arrangement. We've talked many times about the tax implications of each type of support payment. Spousal support is income so is declarable and deductible; child support is not income so is irrelevant to either party's taxes. For that reason you can't consider a dollar of spousal support equal to a dollar of child support.
Divorce Financials divorce settlement software provides analysis tools that help you understand this kind of payment situation. You can set up one spouse as a payer of alimony and the recipient of child support. Not only that but you can that look at the tax implications to both parties. Then, if you want to try trading child support and alimony, you have a comprehensive picture of the financial implications of each scenario.
Prepare as many payment scenarios as you like and compare up to five of them side by side. This not only allows you to understand the situation yourself but makes it easier for your client, and makes it simple to have multiple proposals ready when negotiating with the other attorney.
Taking a few extra minutes to use Divorce Financials family law software to study and comprehend various support scenarios ensures you get the fairest settlement for your client. If you haven't used Divorce Financials before, then download a demo to test it for yourself. If you do use it, then be sure that you understand how to use its many powerful features.