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Child Support and Bonus's

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ZaheerKhan

Junior Member
What is the name of your state (only U.S. law)? CA

A question on how a bonus is handled. In our last round of agreements, my x had a clause writing into our child support agreement that grants her 10% of any bonus I earn. We did not agree to a set annual number that could have been applied over the year as my actual bonus amount varies considerably year on year.

In any case, is the tax treatment of a bonus split for CS handled any differently than normal child support payments? Normal child support is a % of income net of taxes, but my support order just says 10% of any bonus amount and is silent on how taxes are handled. If I am required to give up 10% of my gross bonus to child support, my x’s effective share is closer to 17% of my actual bonus (net of taxes). This does not seem terribly equitable.


Thoughts.
 
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Humusluvr

Senior Member
What is the name of your state (only U.S. law)? CA

A question on how a bonus is handled. In our last round of agreements, my x had a clause writing into my CA agreement that grants her 10% of any bonus received. We did not agree to a set number and apply it over the year as my bonus varies considerably.

In any case, is the tax treatment of a bonus split for CS handled any differently then normal CS payments? Normal CS is a % of income net of taxes, but my support order just says 10% and is silent on how taxes are handled. If I am requried to give up 10% of gross to CS, and another 40/50% +/- to taxes, etc - does not leave much of a bonus.

Thoughts.
You pay 40-50% of your bonus in taxes? That must be some hell of a bonus! Or you must have some lousy accountant.

What do you want to happen here? 10% of your bonus is pretty fair.
 

Humusluvr

Senior Member
Naw... CA is HORRIBLE on taxes. When I used to work in a place that actually GAVE bonuses, when payroll cut the check, most of it was usually eaten up in taxes.
Holy crap! Why do you live there then???

Oh yeah, its sunny. Unlike freakin Ohio. :mad::mad::mad:
 

ZaheerKhan

Junior Member
You pay 40-50% of your bonus in taxes? That must be some hell of a bonus! Or you must have some lousy accountant.

What do you want to happen here? 10% of your bonus is pretty fair.
Unfortunately, it is what it is. Last year, my actual check was reduced by more than 40% when taking into account fed, state, social and sdi. CA tax rate is 9%, trust me they don’t call it the “golden” state because the actual people that live here get to keep any of that gold.

Anyway, I would like to find a equitable way to share the tax burden.
 

jbowman

Senior Member
I didnt realize it was only a CA thing. I thought they were federal taxes that came out.
I got a $250 bonus last month and walked away with $152.00. Woo hoo.
 

TheGeekess

Keeper of the Kraken
Naw... CA is HORRIBLE on taxes. When I used to work in a place that actually GAVE bonuses, when payroll cut the check, most of it was usually eaten up in taxes.
Bama still has the most regressive state income tax and we pay at least 4% sales tax on everything including groceries (sales tax can be added by counties and municipalities, in addition to the state rate).
For single persons, heads of families and married persons filing separate returns:
-- 2 percent on the first $500 of taxable income
-- 4 percent on taxable income between $501 and $3,000
-- 5 percent on all taxable income over $3,000.

For married persons filing joint returns:
-- 2 percent on the first $1,000 of taxable income
-- 4 percent on taxable income between $1,001 and $6,000
-- 5 percent on all taxable income over $6,000.
(Information from Alabama state taxes)
 

myelumia

Junior Member
I am a CA resident.

You may be making out better than you think. Go to the CA child support calculator
Guideline Calculator

At least you pay your base child support on base pay. My is calculated as an average of the last 12 months wages and bonus. If I don't make as much bonus as the last year I still am obligated to pay that rate, even if my bonus was 30% of annual income and is not guaranteed in the next 12 months (say I get none!)
 

LdiJ

Senior Member
You pay 40-50% of your bonus in taxes? That must be some hell of a bonus! Or you must have some lousy accountant.

What do you want to happen here? 10% of your bonus is pretty fair.
It depends on how high his bonus is, and how his employer taxes it. If his employer treats it as a normal payroll, for a standard payroll period, then a LOT of tax is going to be withheld. However, any tax in excess of what was actually needed will end up being refunded at the end of the year...so in the end, it evens out.

I have that issue. Normally I should claim just one exemption however because I get a big bonus after the tax season and therefore a LOT of tax is withheld, I claim 3 exemptions instead, and I balance out come tax time.
 

myelumia

Junior Member
I suspect the 40-50% tax you are talking about is withholding. WIthholding is always higher on big checks, you should know this if you've gotten them before. The only tax that matters for CS is annual income tax, not withholding as you may get a larger percentage of your bonus withholding back (or it pays part of the tax you may owe).

Again 10% may be cheap. For example, if you make 70K base, and 30K bonus, you are paying base CS on the 70K every month and an extra 3K when and if you get a bonus. The CS calculator will ask you for average monthy income over 12 months. Your support will be calculated on 100K annual income. The way it is, you have better cash flow.
 
ZaheerKhan,

Your answer should be found in the judgment/order itself. A well drafted docuement should have specified whether the percentage was to be calcuated on the net bonus, gross, or otherwise. However, to the extent that there is no such specificity, I think you should file an OSC re Clarification of Order and ask the court to determine how the 10% should be calculated. That is, assumming of course, that you are not able to reach an amicable agreement with your ex.
 

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