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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 01-05-2011, 04:41 PM
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Default Notional Grossed Up Child Support Amount?

Friends,

I searched, I really did, but came up snakeyes.

In preparation for going through The Big Scary Process, I am trying to ensure that the offers I have made are reasonable and generous and am wrestling with the term "notional grossed up child support amount."

Recap: I am a custodial SS payor. I have the kids 100% of the time, mom lives 3 provinces away, yadda yadda yadda.

Under the SSAG, we start with the "without child support" formula adjusted as follows:

(1) Reduce the payor spouse’s Guidelines income by the grossed-up notional table amount for child support (plus a gross-up of any contributions to s. 7 expenses).

(2) If the recipient spouse is paying child support, reduce the recipient’s Guidelines income by the grossed-up amount of child support paid (table amount plus any s. 7 contributions).

(3) Determine the adjusted gross income difference between the spouses and then quantum ranges from 1.5 percent to 2 percent for each year of marriage, up to a maximum of 50.

(4) Duration ranges from .5 to 1 year of support for each year of marriage, with the same rules for indefinite (duration not specified) support as under the without child support formula.

They provide an example as well:

Example 8.6

Matt earns $100,000 gross per year and has custody of two teenage children. Anna earns $30,000 gross per year. The spouses separated after 16 years together. There are no s. 7 expenses. Assume entitlement to spousal support has been established.

First, Matt’s income is reduced by the table amount for two children, $1,404, grossed-up to $2,525 per month or $30,300 annually. Matt’s reduced income would thus be $69,700.

Anna is required to pay child support at the table amount of $444 per month, grossed-up to $625 monthly or $7,500 annually. Anna’s reduced income would be $22,500.

After a 16-year marriage, Anna would receive a range of 24 to 32 percent of the adjusted gross income difference of $47,200.

Under the custodial payor formula, Matt would pay spousal support in a range from $944 to $1,259 per month, for a duration of 8 to 16 years.

What I need to know for my purposes, is what this notional grossed up amount is or, more to the point, how it is calculated: How did they get from $1404 to $2525 in the example above?

Thanks,

Cheers!

Gary

Last edited by Gary M; 01-05-2011 at 04:51 PM.
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Old 01-05-2011, 05:09 PM
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The final SS calculation is based on pre-tax (gross) income, but CS is not taxable (to recipient) or deductible (to payor), so it is an after-tax (net income) value. So table CS values must be converted into equivalent pre-tax (gross) values before they can be used in the calculation. This is called 'grossing-up'.

$2525 before tax (gross) becomes $1404 (net) after you pay 44% tax on it.
Not easily calculatable, because of tiered income tax rates, but you can keep plugging in gross income values into the income tax calculator in the www.taxtips.ca website until you come up with the matching net values.

Paul's gross is 100000, which is 70140 net (according to Ontario 2010 calculator, single, with 2 kids under 17, ignoring child benefits).
Subtract 70140-12*1404 = 53291 (the new post-CS net)
By trying different gross income values in the calculator until we get this new net, we find new gross = 71330.
100000-71330 = 28670 = 12*2389 (grossed-up CS).
So, 1404 monthly grosses up to 2389 monthly (2525 seemed a bit excessive to me!)

Last edited by dinkyface; 01-05-2011 at 05:33 PM.
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Old 01-05-2011, 05:31 PM
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Ahhhh, OK, so they take the table amount and calculate what that amount would be if income tax, at your current rate, were added on.

OK, I think I can figure that one out.... Maybe

Thanks df.

Cheers!

Gary
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Old 01-05-2011, 06:31 PM
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Default Can someone please check my numbers?

OK, so, using the formula in my 1st post and the definition kindly provided by dinkyface, I came up with the following hypothetical. Assume tax rates of 44% for me and 20% for her, 16 years of marriage, and S7 expenses of $500/mo:

Income
Me - 90,000/year
She - 24,000/year

Notional CS
Me - 1281 table, grossed up = 2288/mo = 27456/yr
She - 362 table, grossed up = 453/mo = 5436/yr

Section 7
Me - 400/mo = 4800/yr, grossed up = 8570/yr
She - 100/mo = 1200/yr, grossed up = 1500/yr

Adjusted income:
Me - 90,000 - 27456 - 8570 = 53974
She - 24,000 - 5436 - 1500 = 17064

For a difference of 36,910

Applying the 1.5% - 2% rule for 16 years of marriage, we get a range of between 24% and 32% so...

24% of 36,910 is 8858/yr or 738/mo
32% of 36,910 is 11,811/yr or 984/mo

How am I doing so far?

So, if we assume that I can point to every possible reason for a low-range award, I would pay 738/mo in SS and she would pay 462/mo in CS, for a net transfer, me to her, of $276/month.

Am I wrong yet?

If I'm right, then my last offer of $1000/mo SS in return for $500/mo CS AND increasing her share of my pension by another $20,000 can certainly be seen as reasonable and generous, right?

Am I wrong?

I hope I'm not wrong...

Thanks in advance,

Cheers!

Gary
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Old 01-06-2011, 10:39 AM
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Isn't it amazing how divorce makes us matmeticians and accountants? LOL
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Old 01-06-2011, 11:00 AM
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Quote:
Originally Posted by ConcernenedStepMom78 View Post
Isn't it amazing how divorce makes us matmeticians and accountants? LOL
Agreed. I can forgive my ex for cheating, but not for making me do all that math.
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Old 01-06-2011, 11:07 AM
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Quote:
Originally Posted by About_Time View Post
Agreed. I can forgive my ex for cheating, but not for making me do all that math.
I'm not sure but I think that ties the kitten from yesterday for post of the year so far.
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Old 01-06-2011, 03:42 PM
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Quote:
Originally Posted by lumpy View Post
I'm not sure but I think that ties the kitten from yesterday for post of the year so far.
With all due respect to About_Time, no way!!

The kitten, hands down!!!
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Old 01-06-2011, 03:50 PM
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Quote:
Originally Posted by dadtotheend View Post
With all due respect to About_Time, no way!!

The kitten, hands down!!!

I told my ex once that his biggest mistake was not his cheating ... it was marrying an accountant whose father is an accountant.
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Old 01-06-2011, 04:03 PM
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Quote:
Originally Posted by KeepSmiling View Post
I told my ex once that his biggest mistake was not his cheating ... it was marrying an accountant whose father is an accountant.
hehehehehehehheehhehehehehehhehehehehhe

-----------------------------------------------

On another note, is nobody able to confirm or refute my figuring above?

Thanks,

Gary
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