SEASONAL VARIATIONS IN INCOME

April 18, 2011 § 1 Comment

One of the vexing questions in child support cases is how to treat seasonal variations in income.

Let’s say your client is a salesman who brings home only $2,000 per month eleven months out of the year.  Every December, however, he receives a bonus that has averaged $10,000 a year over the past ten years.  What can you tell him to expect about child support for his two children?

What you have here is a seasonal variation in income.  For ten months guideline child support would be $400 per month, and for one month it would be $2,000.

How should you ask the court to address it?

I have heard attorneys argue that the bonus should not be counted because the client is never automatically entitled to a bonus, and he might not get it.  That argument usually does not fly because of the all-encompasing language of MCA § 43-19-101 (3)(a), which defines income for child support purposes.  Consider the following case:

In Alderson v. Morgan ex rel. Champion, 739 So.2d 465, 466 (Miss. App. 1999), the chancellor had based his adjudication of modified child support on total yearly income, including the bonus, divided by twelve.  Using the figures above, the total yearly income, then, would be $34,000, which produces adjusted gross income of $2,833.  The resulting child support would be $566.  In effect, the chancellor’s decision spread the bonus over the entire year.  On appeal, the court of appeals rejected the father’s argument that it was improper for the trial court to base child support on anticipated income.  The court noted that it was proper in that case for the chancellor to assume the bonus based on a one-year history of a bonus.

In the alternative, you could ask the court to find that the seasonal variation in income rebuts the presumption that the guidelines are applicable, and that the court should not apply the guidelines to all twelve months equally.  Your authority is MCA § 43-19-103(d), which specifies “seasonal variations in one or both parents’ income or expenses” as authority for the ccourt to find that it would be unjust or inappropriate to apply the guidelines.  Applying that statute to our scenario, you could propose that the court order $400 for eleven months and $2,000 in December.

What if the bonus that you are asking to except from the guidelines varies?  Say your client receives $10,000 in most years, but has gotten as little as $5,000, and has averaged $8,000.  Logic would dictate that you could suggest a 20% figure of whatever the amount of the bonus might be, but the appellate courts have frowned on percentage child support.  Why not propose a hybrid amount for the bonus month that would be 20% of the actual bonus, but not less than 20% of the average.  In other words, you would be asking the court to rule that child support would be “Twenty percent of the actual adjusted gross income received from the bonus, or $1,600, whichever is greater.”  That gives the court an actual, minimum figure to enforce, and allows the parties some leeway to bring the matter to the court if there is a dispute as to the amount.

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