INCOME FOR CHILD SUPPORT
April 10, 2012 § 3 Comments
MCA § 43-19-101 should be familiar to you. It sets out the child support award guidelines. Since the guidelines are based on the payer’s income, it’s critical to understand just what and what is not included in income.
Subsection 3(a) tells us that we first have to “Determine gross income from all potential sources that may reasonably be available to the absent (i.e., noncustodial and paying) parent.” That’s an interesting phrase, “potential sources that may reasonably be available.” Notice that it does not refer to actual income. Potential sources that might come into play are to be considered.
Income under 3(a) includes, but is not limited to …
- Wages and salary income. There is no exception for overtime; it’s included.
- Income from self employment. Both reported and unreported income in this category is covered.
- Income from commissions. Variable and seasonal income is included, and there are different approaches that the court can use to address it. Bonuses are included.
- Income from investments. Dividends, interest and capital gains are income.
- Interest income.
- Interest earned from any trust account or property. It makes no difference whether it came from a “family trust” or similar creature; if it is income, it is included.
- Paying parent’s portion of joint income of both parents. As reflected on the joint tax return.
- Worker’s compensation.
- Disability. You can read the rules for calculating child support when the payer is a social security recipient here.
- Unemployment. No exemption from child support when the income source is unemployment benefits.
- Annuity and retirement benefits.
- IRA disbursements and withdrawals.
- Any other payments made by any person, private entity, federal or state government, or any unit of local government. Any 1099 income would be included. Any refund of taxes paid in would be included.
- Income earned from an interest in inherited property.
- Any other form of earned income.
At the end of 3(a) is the statement: ” … gross income shall exclude any monetary benefits derived from a second household, such as income of the [paying party’s] current spouse.”
Section 3(b)(i) requires that overpayments of taxes are to be included in gross income. That means that income tax refunds must be added back in. For low-income taxpayers who claim benefits such as earned income credit and head of household status, this can mean an increase in gross income by as much as $3,000 to $5,000, based on what I’ve seen in court. The trick is to figure out how much of that refund was attributable to the paying parent, and not to his spouse, and then to calculate his tax rate, social security deduction, etc. Don’t expect the judge to do all that math for you on a hunch as to what the proper percentages might be.
As a rule of thumb, you would do well to include anything that might even remotely be considered income. The judge will. If it looks like income, sounds like income, smells like income and feels like income, it most likely is.
One would think that the statute and its intent are straightforward and unmistakeable, but not from what I see in court. Witnesses often testify that they did not include bonuses “because I don’t know whether I’ll get one this year,” or commissions because “I never know from month to month what my commissions will be,” or overtime because “I don’t know when I’ll get some more overtime.” That’s simply not the law. Irregularity and umpredictability are factors that the court can consider, but they don’t warrant completely excluding those items from income.
As a practice matter, are you asking questions in your interrogatories, depositions and requests for production that address all those types of income?