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.
  • Alimony.
  • 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?

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  • Danny Lampley says:

    Judge Primeaux,
    Under the category “Disability” you direct that one can find the rules “here” which I assume was meant to be a link. Do you have some info regarding the treatment of supplemental security income vis-a-vis the anti-alienation language of the Social Security Act? Thanks much.

    • Larry says:

      Danny … I fixed the link. It takes you to a post on SS benefits and their interaction with child support. Not sure whether that would answer your question, but I have not posted anything on the anti-alienation aspect.

      • Danny Lampley says:

        Thanks. I think after Barnes v. DHS the rule is that child support can be ordered out of SSI income; however, the MSSCT recognizes that withholding orders constitute legal process and are not permitted under the SSA. They left open the question whether an obligor can be jailed for failing to pay (though if that ain’t “legal process” I don’t know what is). Barnes’ SSI check was paid to a payee on his behalf who saw to it that he had a roof, utilities, and food.

        I’ve got a schizophrenic client whose check is cut off each time he’s in jail. When he’s out his mother as payee sees to it that he has a roof, etc. At some point the effort to collect the support moves beyond futility to a kind of institutional meanness. At this income level and type, when the disability is based on mental illness, the need for a guardian ad litem becomes a factor, too — something which the local DHS office simply ignores until I bring it up and the chancellor requires it.

        I would like to see the legislature provide a minimum floor of income, tied to SSI levels, i.e., sufficient to provide a bare existence. I’m not sure about a flat prohibition of calculation for purposes of child support. But there needs to be some kind of protection when we get to an income level where it is not an issue of an able person foisting responsibility on the State to provide support for children so much as just shifting government money paid to one person who needs it to another person who needs it.

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