[VacaDave]

I am looking for a confirmation that the Ostler-Smith Bonus calculation tables (for example, printed out from Dissomaster) are based on Gross Bonus amount versus Net Bonus.

I know calculations are typically based on Gross amount, but in this case, it just doesn't seem correct...

For example, my Gross Bonus of $35,000 results in a Net of $21,000.

If using the Gross amount to calculate, the Ostler-Smith table requires 8.2% Child Support, and 27.8% Spousal Support = approximately $12,700 payment. This is 60% of take home!

If using the Net amount, the payment is only $7,600 (36% take home).

Normal CS & SS payments are about 26% of Gross income, and 40% of net, so it doesn't seem right that I would pay so much greater portion of Bonus.

(If you know the answer, can you please provide me with the reference so that I can provide proof to spouse.)

Thanks!

[cdad]

The dissomaster is a formula and it should include your taxable rate in it. Are you positive the numbers were entered correctly ?

[JudyKayTee]

This site says it's gross: http://www2.courtinfo.ca.gov/protem/pubs/bg201.pdf

[VacaDave]

The dissomaster is a formula and it should include your taxable rate in it. Are you positive the numbers were entered correctly ?

My attorney thinks it is correct, but can't explain why the payout is so high. I will have a second attorney review the numbers and verify everything is input correctly, and possible explain more.

It would be interesting to know if others that pay their spouse a portion of their Bonus through Ostler-Smith calculations also pay such a high rate compared to their normal wages...

[SanDiegoGuy]

The part that you're not taking into account is that bonuses are taxed at a higher rate than other income. So even though the take-home is reduced by the higher tax rate, you get some of that back at tax time depending on your tax rate, etc. So you are really getting more than $21,000 take home after you file your tax forms (for most people)... Still stinks that the spouse gets their share up front, and you have to wait for your own full share until tax time... You can combat that by adjusting your exemptions to get more take-home pay and less tax refund at the end of the year.

[mpeachey]

@SanDiegoGuy - Bonuses are not taxed any different than other income. They are just income.


@
The CS is not taxable to her, and not deductible to you :-(
The SS is taxable to her and deductible to you :-)

So (you're using a 40% tax rate)
You get a $35,000 bonus (nice!)
She gets 27.8% SS = $9,730 to her gross, = $5,838 net of taxes (assuming she also has 40% tax rate)
She gets 8.2% CS = $2,870 to her gross, no tax hit
Her total is $8,708 after taxes

You get $25,270 bonus after her SS
You pay $10,108 in taxes on it
You give her $2,870 in CS
You net out at $12,292 after taxes and her take in SS and CS.

At the end of the day:
$8,708 to her (25%)
$12,292 to you (35%)
$14,000 to taxes (40%)
$35,000 total (100%)

QED

[mpeachey]

My attorney thinks it is correct, but can't explain why the payout is so high. I will have a second attorney review the numbers and verify everything is input correctly, and possible explain more.

It would be interesting to know if others that pay their spouse a portion of their Bonus through Ostler-Smith calculations also pay such a high rate compared to their normal wages...

I pay 11.5% CS. I don't pay SS an longer.

[mpeachey]

The part that you're not taking into account is that bonuses are taxed at a higher rate than other income.

Actually, bonuses are taxed just like any other wage/tips income. Maybe you're thinking about capital gains from investments?