BREAKING LOCK STEP WITH THE CHILD SUPPORT GUIDELINES
September 5, 2012 § 4 Comments
Holly and Christopher were divorced in 2007, and Holly had custody. Holly remarried and moved with the children to Pennsylvania.
Holly filed for modification in the Chancery Court of Lowndes County alleging that she was a stay-at-home mom who needed more money from Christopher to be able to pay for the children’s various expenses. She said that the $1,000 Christopher was paying was simply not enough to cover the children’s expenses, and she wanted the judge to apply the child support guidelines at MCA 43-19-101 to increase Christopher’s child support to what it should be at his increased income.
The chancellor reviewed the parties’ financial statements, along with the other evidence in the record, and found that the statutory amount of child support payable by Christopher should be $1,400. Nonetheless, she denied Holly’s petition to modify based on the fact that Christopher had to pay the expense of visitation between Mississippi and Pennsylvania, and used that fact as a basis to depart from the statutory guidelines, pursuant to MCA 43-19-103, which sets out the critera the court is to use to justify any departure from the guidelines.
Holly appealed, and in Quinones v. Garcia, decided August 28, 2012, the Coa affirmed.
The appellate court rejected several of Holly’s arguments, including that the chancellor had improperly considered her current spouse’s income and that Christopher had manipulated his mandatory deductions, and held that it was proper for the chancellor to deviate from the statutory child support guidelines where the judge ” … makes ‘an on-the-record finding that it would be unjust or inappropriate to apply the guidelines in the instant case.'” Chesney v. Chesney, 910 So. 2d 1057, 1061 (¶7) (Miss. 2005) (citing McEachern v. McEachern, 605 So. 2d 809, 814 (Miss. 1992)). The court found substantial evidence to support the chancellor’s decision.
When you are trying a child support case, don’t get in lock-step with the idea that the statutory guidelines are inflexible. Look at the deviation criteria. If one of them applies — upward or downward — in your case, use it to your advantage. Offer evidence to support your argument. In this case, Christopher’s attorney saved his client $400 a month.
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.
- 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?
WHICH EXPENSES GET DEDUCTED FOR CHILD SUPPORT
March 20, 2012 § Leave a comment
In Coggins v. Coggins, handed down from the COA February 14, 2012, the appellate court was faced with the appellant’s claim that the chancellor erred by refusing his request to deduct rental investment expenses from gross income in order to arrive at adjusted gross income for calculation of child support.
The COA stated:
“¶19. The inclusion of income and deductions for calculating adjusted gross income for child support is primarily mandated by statute. According to section 43-19-101, in calculating gross income, the chancellor must consider ‘gross income from all potential sources,’ including wages and salary income, income from self-employment, and income from investments. As the chancellor explained, section 43-19-101(3)(b) lists several deductions that may be subtracted from the gross income figure, such as federal, state, and local taxes, social-security contributions, and mandatory retirement and disability contributions, but it does not list business expenses. Additionally, the Mississippi Supreme Court has allowed the deduction of legitimate business expenses in the case of a selfemployed payor-spouse. See Nix v. Nix, 790 So. 2d 198, 199-200 (¶¶3, 5) (Miss. 2001) (The chancellor considered the payor-parent’s legitimate business expenditures for reasons of equity, in order to determine available income for child support; he was a self-employed plumber.). However, the chancellor found no caselaw, nor do we, that allows for a deduction of expenses related to investments or supplemental business enterprises, which would be taken from the gross income of the payor-spouse. Therefore, in arriving at the adjusted gross income figure, the chancellor must include income from many sources, but not all expenses. The allowable deductions for this figure are statutory, and they differ from the allowable deductions for income tax purposes, upon which Bill appears to base his calculations. “
The court went on to point out that, although the statute allows for deduction of the expenses of self-employment, the appellant in this case was not self employed. The expenses he claimed arose out of investments that were a secondary source of income. His secondary employment resulted in a loss, and the COA said: “If [the appellant] opts to continue this rental venture at a loss, it should not be done to the detriment of his child.” The COA upheld the chancellor’s decision.
This case highlights the need for you to be quite familiar with with the child support guideline statute when you present child support issues to the court, and when you draft child support provisions in property settlement agreements. I urge you to read the guidelines and discover exactly what it is that should and should not be included in the calculation of child support.
While I’m on the subject, let me urge you (once again) NOT to list expenses on your 8.05’s as “mandatory” when they are not. The word “mandatory” so loosely used by so many of you is applied to all manner of deductions that simply do not meet the requirement of the statute. The statute limitss deductions to “legally mandated deductions.” That’s the exact phrase. So if there is a law that requires it to be deducted, it is a “legally mandated deduction.” That would include federal and state income taxes, social security, Medicare, and PERS for state employees. Health insurance (for the time being) is not legally mandated, nor are dental or cancer insurance, United Way, IRA contributions, etc., etc., etc. When you gratuitously label a deduction as “mandatory,” you are making the judge have to explain in the opinion why the deduction is not allowed. More work for the judge, which violates the cardinal rule — if you want to win, make it easier for the judge to find in your favor.
The Better Chancery Practice Blog 