Before you sign off on your custody agreement, consider these financial factors…
How you divide custody and parenting time with the other parent is rarely based on financial considerations alone. Occasionally, however, there are some financial factors worth taking into consideration before you sign on the dotted line. Of course, one should never fight for custody or increased visitation rights on the belief that it will save them money in child support. Obtaining more time with the children means expending more money to support them directly (meals, activities, travel, increased utility usage, etc.). What you save in child support paid to the other parent, you’ll incur as additional direct costs, spent directly on the children.
One thing parents should certainly consider is the dependency exemptions permitted under federal and state tax codes. The so-called “tax deductions” for children can have a significant effect on one parent’s tax obligations while having a minimal effect, if any, on another party’s obligations. Knowing what you’re likely to save by claiming the children as dependents can help you size up the financial ramifications of physical custody.
Parents should also consider whether either party will be receiving welfare, disability, public assistance or other kinds of public benefits. If a parent qualifies for the federal sponsored Aid to Families with Dependent Children (AFDC) program, it means she will be receiving cash assistance and medical benefits for the children. She may — or may not — be disclosing her child support payments from the children’s father. The father may, in turn, be overpaying support if the children are being government subsidized. If children can be supported by two parents, welfare agencies are usually reluctant to qualify either parent for assistance. How much time a parent spends with the children, whether she has physical custody or visitation rights, and how much she receives in child support may determine what public benefits she qualifies for.
Financial factors should also be considered in split custody arrangements. A split custody arrangement exists when one parent takes custody of one child while the other parent takes custody of another child. Often, parents find it easy to simply cancel each other’s obligation to pay support. But usually, one parent gets the short end of the stick when this arrangement is made. To determine support in split custody arrangement, the parents should first calculate the amount of child support the father would be paying to the mother if there were only one child and the mother had custody. Then, they should determine the amount of child support the mother would be paying to the father if there were only one child and the father had custody. After calculating both child support figures (pursuant to state support guidelines), the lower support figure should be subtracted from the higher support figure. The party who owed the higher support amount should then pay the difference between the two amounts to the party with the lower support amount.
These are but a few of the financial considerations that may enter into negotiations for child custody and parenting time settlements. While money is usually not the determining factor, it may be a useful factor in helping you to evaluate the practicalities of your position in a contested child custody case.