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  • Establishing CS amount

    A few questions... in establishing the amount for child support, is it just the previous year's T4 that is used? I know about the tables and calculators. What if the payers income has gone down significantly the following year? For example 2014 was a good year (salary is base+commission) and 2015 wasn't so hot. Also, would consideration be given to previous years, 2013, 2012, etc.?
    Do CS payment amounts ever get updated every 6 months instead of every year? And would SS follow the same rules, if entitlement is established?

  • #2
    Originally posted by magic3 View Post
    A few questions... in establishing the amount for child support, is it just the previous year's T4 that is used? I know about the tables and calculators. What if the payers income has gone down significantly the following year? For example 2014 was a good year (salary is base+commission) and 2015 wasn't so hot. Also, would consideration be given to previous years, 2013, 2012, etc.?
    Do CS payment amounts ever get updated every 6 months instead of every year? And would SS follow the same rules, if entitlement is established?
    Usually when you are first starting out the last three year average is used. If income fluctuates yearly some people due continue to use the three year average. However normally once the amount is established CS is adjusted on the previous years income.

    I don't know much about SS but once it is established there is usually a review term of so many years (5 or so). I don't believe it is reviewed annually like CS is.

    Sent from my SM-T560NU using Tapatalk

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    • #3
      CS incomes are updated annually by line 150 of the tax form. However, if income goes up or down outside of this cs should be updated immediately with the reasoning being that increases in cs should benefit the children immediately. Previous years have nothing to do with cs. The FSCG outline this in the section titled "what if line 150 isnt a good indicator of income".

      SS is a different beast.

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      • #4
        In theory CS could get updated every month, if your income fluctuates a lot from month to month. In practice, most people exchange tax information once per year (e.g. you and ex exchange your 2015 tax returns on or before June 15 2016) and CS for the next twelve months is based on the most recent tax information (so in the example I gave, you'd be paying based on your 2015 income from July 2016 until June 2017).

        This means that if your income goes up or down, the impact on your CS payments is lagged by a year. For example, my income in 2015 dropped a little bit because of study leaves, but I was and am still paying offset based on my 2014 income. When we next exchange tax info in June 2016, I'll "catch up", because for 2016-2017, I'll be paying based on my reduced 2015 income, even though I'm off study leave and my income will be higher this year.

        If your income changes a lot from year to year (e.g. you work on commission), some people using rolling three-year averages. The usual standard for income is line 150 of your tax return, however as rockscan pointed out sometimes line 150 isn't a good indication of true income and the federal government provides other ways to establish it.

        SS is pretty much whatever you and ex can agree on - there aren't clear legal guidelines like there are for CS. You can agree that SS will be updated every year, or you can agree that it will be a fixed amount going forward. Most people build in either an end date or a review date (if there are conditions attached to SS, like it will continue until it cumulates in a total figure, say $20 000 in the form of $500 monthly payments over 40 months, or it will end if ex enters a cohabiting relationship with someone else). Open-ended, indefinite spousal support is very unusual.

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        • #5
          I should also point out in cases like my partner, updating immediately is beneficial to the kids. He was unemployed for almost two years and finally got a job paying double what his taxes will show for 2015. Instead of the kids waiting a year and a half for his income tax to reflect his current income, he will be paying immediately.

          For people who fluctuate year to year its more difficult. From the sounds of what you posted though it sounds like the payor had a bad year last year and cs will be dropping. Unfortunately this happens and you'll have to adjust accordingly. If the payor is constantly losing money or not being up front on income then its a cause for question.

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