Understanding the Hardship Deduction: What You Need to Know

by Miod and Company

Most parents will do anything they can to provide for their children. Many will even forgo their own wants and needs to ensure that their kids can eat well and live comfortably. That said, sometimes money gets tight. Maybe one of the kids recently underwent expensive surgery and the family is now drowning in medical bills. Maybe hours have been cut at work, and it’s just become incredibly difficult to keep up with California’s sky-high cost of living.

Depending on the nature of your hardship and your financial situation, you may qualify for the hardship deduction. As is laid out in California Family Code section 4059(e), hardships may be granted to a parent who can demonstrate a tangible financial need. The hardship deduction essentially reduces the amount of money a parent owes in child support

In this article, we will explore in greater detail what the hardship deduction entails and what exactly qualifies as a hardship.

What Qualifies as a Hardship?

The Code identifies several very specific cases in which a parent may qualify for the hardship deduction. It’s also worth noting that facing one of these hardships does not automatically qualify one for the deduction. Any party seeking a deduction must show evidence of need in court.

Qualifying hardships are:

  1. Extreme financial burden from health expenses. It doesn’t take much to start an unmanageable pile of medical bills. Just one severe illness or injury will do it. That said, a parent seeking the hardship deduction for significant health expenses must demonstrate not only the extent of the healthcare expenses but also that they are responsible for paying for such expenses.
  2. Living expenses accrued by the parent and the family with whom they presently reside. Living in California is quite costly, especially when you have to take into account the needs of two different families. A court may grant a hardship deduction if the parent can produce evidence of steep living expenses for the “natural or adopted children” for whom they are financially responsible and who presently live with them.

 

What Factors Will Be Taken into Account When Calculating Hardship?

The judge may take several factors into account when calculating hardship. These factors typically include:

  • The incomes of both parents. The judge will likely first examine the financial well-beings of both parents to get a clear picture of what needs must be met. The judge may start by looking at the total gross incomes of each party (that is, what they make before any taxes or deductions have been accounted for). Beyond that, the judge may also consider the requesting parent’s net disposable income after deductions have been factored into the equation.
  • The number of children. It only makes sense to take into account the number of children for whom a parent is responsible when making such a decision. The judge will likely consider children presently living with the payor (biological and adopted) and children living with the other parent for whom the payor is financially responsible.
  • Tax obligations. The judge will also consider the payor’s tax liability (before any deductions are applied) and how these tax obligations affect net income.

The Hardship Deduction: A Complicated Code That’s There to Help

At the end of the day, caring for children is an immense responsibility, whether those children live under your roof or not. The hardship deduction is in place to ensure that a parent’s financial needs are taken into account when calculating child support, while also ensuring that the parent pays what they are legally deemed to be capable of paying to promote the well-being of the children.

Have any questions about the hardship deduction? We are ready to answer!

Reach out to the experts at Miod today!

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