How to maximize income exempt from Child Support

Anyone who is the victim of obscene child support rulings needs to read this. The courts can include just about any kind of income for the purpose of calculating your support payment. A recent post by @dantheman introduces a way to generate income that I believe is also completely exempt from child support.

Lets take a father of two who earns $100,000 per year and a mother who earns $30,000 per year. According to the guidelines the child support payment will be $1200 per month. If this father had $300,000 invested and earning 8% per year then the courts will factor in an additional $24,000 per year of income to the father and his child support payments would increase by over $800 per year.

Taking that same $300,000 and paying off your house increases your effective rate of return by 0.2% while reducing your child support by over 5%. Over the life of your children this could save you over $10,000. Keep in mind that child support is paid after taxes. This means that saving $800 per year in child support is like earning over $1100.

After spending tens of thousands of dollars fighting for custody and losing, you need every extra penny. I am not sure how much this advice can help someone who has survived divorce and only earns $100,000 per year. The probability of you having any spare cash to put toward owning home is slim. But for those of you who are fortunate, this technique can work.

Options for Beat Broke Dads

Any money you spend reducing your expenses will improve your standard of living without giving the government or your ex-wife a dime. This means you can buy energy efficient LED light bulbs or a small solar panel. This may be the only way to effectively build a nest egg.

The courts are sneaky bastards and can impute any amount of income to you they want, but so far no courts have imputed income from money saved due to assets owned.

What about the children?

Children with parents who earn the minimum wage would only pay $788 / month in child support for 2 kids. This means that the government thinks this is the minimum liability per child. Anything above and beyond this amount indicates an unjust bias against higher achieving non-custodial parents. See my prior post for more on how child support extracted at gunpoint is immoral and against the non aggression principle. After all does it really cost $20,000 per year to support two kids in your home? If the custodial and noncustodial parent were really providing equal financial contributions then that is the minimum cost. In other words, if child support really went to the kids then they would be fine and spoiled rotten already, every dime you can save will not harm the kids. In fact, saving for your retirement may be the single biggest gift you could give your children.

I am not a lawyer. Your milage may vary. Good luck!