Are you a parent who pays for work-related child care or daycare expenses for one or more children?
If so, there is something you should be immediately aware of. When child support is calculated, work-related childcare expenses are included on the Rhode Island Child Support Guidelines Worksheet and they may substantially affect the amount you have to pay for your overall support for your child.
However, if you look closely at the Rhode Island Family Court's Child Support Guideline Worksheet you should direct your attention to Line 7 of the sheet if you pay childcare / daycare expenses.
First, you should note that child care / daycare expenses must be "work-related" in order to included as a factor on the RI Child Support Guideline Worksheet for calculating the child support paying parent's obligation. If it is not "work-related", in other words, if it is not reasonably necessary for the placement parent to go to and/or attend work or work-related training, then the childcare cost should not be included on the Rhode Island Child Support Guideline Worksheet as something the child support paying parent should pay. The idea here is that the childcare / daycare expense should be paid proportionately by the child support paying parent if there is a work-related gain for the minor child as its basis.
Second, you will note that there is a small phrase in parenthesis under the Line 7 listing which states after the words "Work-Related Child Care Costs" which states (actual costs minus federal tax credit). The Federal Tax Credit is the Child Tax Credit provided for in you Federal Income Tax Returns.
Currently, the maximum Child Tax Credit remains at $1,000 per qualifying child.
Let's use this in an example for the sake of understanding:
John and Tammy are divorced. They have two children that are placed with Tammy. Tammy works and pays $140 per week for full-time daycare for one child and $60 per week as child care in an after school program for the second child both of which are needed for Tammy to work full-time to support the children.
The Rhode Island Child Support system is based upon 4.3 weeks in a month. Thus, the Work-Related Childcare Costs are $200 x 4.3 weeks or $860 per month which are the actual childcare costs.
Let's assume that John makes 60% of the total income made by John and Tammy together and Tammy makes the other 40%.
Now without considering anything more, John will be responsible for 60% of that $860 each month which is $516 per month.
However, if we look at Tammy's tax return then we find that she took the Child Tax Credit for both children and qualified for the full Federal Child Tax Credit of $1,000 per child for a total of $2,000 for the year.
Therefore, John is entitled to have the $2,000 deducted from the actual work-related childcare costs. Since this was done on a monthly basis we would take the $2,000 and divide it by the 12 months in the year. $2,000 divided by 12 months yields $167 per month.
Ultimately then the calculation changes. The $860 per month is reduced by the $167 per month benefit that Tammy receives from the Federal Child Tax Credit. After this reduction, the work-related childcare costs goes from $860 down to $693. So John's contribution goes down to 60% of $693 per month which results in a reduced contribution of $416 per month as opposed to $516 per month.
A tip for any parent who is or could end up paying for childcare costs is to request the production of the placement parent's full tax returns to see if the Federal Child Tax Care Credit has been taken and the placement parent has been allocated the full credit. This could save you $100 or more per month.
NOTE: RARELY, IF EVER is the Federal Child Tax Credit calculated which is to the detriment of the child support paying parent. Keep this in mind, it could save you significant money.
Christopher A. Pearsall
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