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If you are going through a divorce and have minor children, you surely are curious as to calculating child support.

And surely you have questions.  What kinds of income are included in the calculations?  Just earned income?  What about income from a trust fund?  What about welfare benefits, disability benefits, or retirement benefits?

Should overtime be included as part of monthly income?”  Regular overtime?  What about occasional overtime?

Can you deviate from the statutory child support guidelines?

Let’s take these and other questions one at a time.

First, Utah law provides Child Support Guidelines used by the courts to calculate a parent’s child support obligation. The guidelines have three components:

1. Base child support
2. Medical care
3. Child-care expenses

Base child support

A table is normally used to determine the base child support obligation.

Medical care

In addition, the guidelines require parents to provide medical insurance coverage for their minor children, if it is available, sharing the costs of the children’s portion of the premium, in addition to sharing any non-insured medical expenses (including deductibles and co-payments).

Child-care expenses

Utah State law also requires the parents to share work-related child-care expenses. Child support continues until the child is 18 and has completed high school.

Upon petition by either parent, the courts may increase or decrease the child support obligation, if there have been significant changes in income or in other circumstances since the divorce decree was entered.

Utah courts generally set child support according to the guidelines although, in unusual circumstances, they may order a different amount. The parties can agree upon child support amounts that meet the Child Support Guidelines, but the courts must approve their agreement before it becomes an enforceable order of support. Courts may enter an order requiring a non-custodial parent’s employer to withhold the child support amount from the parent’s earnings, unless the parties agree to another method of payment.

Source:  http://www.utcourts.gov/howto/divorce/#decidesupport

What is gross income?

Utah Code § 78B-12-203(1) provides that ”gross income” includes prospective income from any source, including (but not necessarily limited to):

• earned and nonearned income sources which may include
• salaries,
• wages,
• commissions,
• royalties,
• bonuses,
• rents,
• gifts from anyone,
• prizes,
• dividends,
• severance pay,
• pensions,
• interest,
• trust income,
• alimony from previous marriages,
• annuities,
• capital gains,
• Social Security benefits,
• workers’ compensation benefits,
• unemployment compensation,
• income replacement disability insurance benefits; and
• payments from “nonmeans-tested” government programs.  “Means-tested” government welfare programs restrict eligibility for benefits to persons with non-welfare income below a certain level. Individuals with non-welfare income above a specified cutoff level may not receive aid. Thus, Food Stamp and Temporary Assistance to Needy Families (TANF) benefits are means-tested and constitute welfare, but Social Security benefits are not.

Many people are paid bonuses, get “cafeteria plan” contributions from employers, and other perks that employers provide.  They can often be considered “income” for child support calculation purposes as well.

How is child support calculated for military personnel?

See Utah Department of Human Services, Division of Office of Recovery Services, Child Support Guidelines:

CS 403P Income

07/94 Revised  10/21/10

“Military pay often includes monthly allowances for housing and/or food.  When determining the party’s gross income, include allowances that are received.  For example:  The military non-custodial parent (NCP) receives $1495/month base pay plus a food allowance of $262/month and a housing allowance of $831/month, resulting in a gross monthly income of $2588.”

Source:  http://www.supportguidelines.com/articles/art200303.html

Military compensation consists of basic pay and can also include Basic Allowance for Housing (BAH), Basic Allowance for Subsistence or Separate Rations (BAS or Sep Rats), special skill pay (flight pay, etc.), and bonuses (such as, for example, reenlistment bonuses).

• Basic Pay varies depending upon the service member’s pay grade and years of service.
• Basic Allowance for Housing (BAH)
• Basic Allowance for Housing (BAH). Service members receive BAH unless they reside in military housing or the barracks. The amount varies, depending upon pay grade, dependent status, and home station zip code.

In general, all pay and allowances may be considered in setting the support obligation.

It may also be appropriate under state law/guidelines to consider the following factors:

• All members receive BAS/Sep Rats or they live in government accommodations and eat in the mess hall for free; this “in kind” compensation may justify an upward adjustment of cash income in setting support. Thus, perhaps in some cases the BAH (and BAS/etc.) amount should be constructively added to the member’s pay, as the reasonable value of the “in kind” income, even if the service member is not receiving these components of military pay.

• BAH, BAS/Sep Rats, are not taxable, and if state guidelines are based on gross pay (and thus assume that the obligors pay an average tax rate on their full income), it may be appropriate to adjust military pay upward to factor in the nonexistent taxes. The amount of the adjustment would be the marginal tax rate on the member’s nontaxable income. It may also be appropriate to add in the employee’s share of FICA taxes.

A member can be entitled to a limited BAH payment based solely on paternity of a child born out of wedlock (and generally all the BAH money received solely as a result of having this child must be used to support the child).

To determine the service member’s total income:

• Get copies of monthly pay statements — (called Leave and Earning Statements (LES)) — insist on seeing total gross income as well as other data.
• Carefully review allotment deductions — they can be manipulated (e.g., an allotment can be part of an automatic savings plan).
• A Freedom of Information Act request for copies of pay statements may be honored. Appendix D is a sample request.
• Additional information available from these statements:

• How much leave the member has accrued — is an SSCRA delay really needed?
• What state the member claims as domicile for income tax purposes — may help establish jurisdiction.
• Whether or not he is receiving BAH and BAS/Sep Rats.
• How many dependents are being claimed for income tax purposes.

• Review tax returns to discover other income, but do not use them to determine gross military income — much of military income is tax free.

How much income can be considered in calculating child support?

Utah Code § 78B-12-203(2 and 3)

Income from earned income sources is limited to the equivalent of one full-time 40-hour job.

If and only if during the time prior to the original support order, the parent normally and consistently worked more than 40 hours at the parent’s job, the court may consider this extra time as a pattern in calculating the parent’s ability to provide child support.  Notwithstanding, specifically excluded from gross income are:

• cash assistance provided under Title 35A, Chapter 3, Part 3, Family Employment Program;
• benefits received under a housing subsidy program, the Job Training Partnership Act, Supplemental Security Income, Social Security Disability Insurance, Medicaid, Food Stamps, or General Assistance; and
• other similar means-tested welfare benefits received by a parent.

Rule of thumb: a parent who worked overtime prior to commencement of the divorce proceedings being filed will likely be expected always to work overtime (or make the equivalent of what he earned working overtime) for child support purposes[i].  Unfair, yes, and that’s just the way it is.

For example, say parent “A” has historically and consistently worked overtime up until the divorce proceeding began.  This parent will usually (usually, but there are no guarantees) have his child support obligation based upon the income he earned working overtime, and he will be  expected to pay child support based upon that monthly gross income figure whether he continues to work overtime or not.  In a sense parent “A” is being forced to work overtime or to earn the overtime wage equivalent until his child support obligations end.  Courts and the legislature know this, and they generally don’t have a problem with that.  Don’t believe me?  Ask around, you’ll see.

As another example, say parent “X” has never worked overtime until the divorce proceeding began.  After the divorce proceeding began, however, parent “A” began working long shifts to cover higher legal expenses and/in fill in now-vacant time.  This parent may get lucky (but there are no guarantees) and not be forced to earn the income that he has only been able to earn through working overtime until the minor child to reach majority to pay child support.

I wish I could take credit for this pearl of wisdom that a fellow lawyer shared with me:  Good behavior in a marriage is bad behavior in divorce, and vice versa.

Say a husband and wife have a strained marriage because they’re in debt up to their eyeballs.  Husband says, “Look, it’ll be hard on me and us, but I can work some overtime and apply the extra earnings toward paying down our debt.  My overtime coupled with severe spending cuts will allow us to be debt-free in two tough years.”  So wife goes along with this idea (and it is a good idea for getting out of debt) and husband earns an extra $20,000 that year in overtime two years in a row.  They eat beans and rice for virtually every meal, turn down the thermostat, patch trousers, etc., and, by golly, they pay off their debts!  Husband is exhausted, but feeling serene and secure.  And that’s when wife decides to file for divorce, claiming her husband has historically worked overtime and heaven help him.

Ah, but I’ve heard that if I am self-employed it’s hard to get a bead on what my true income is.

Utah Code § 78B-12-203(4)

It’s true that it is much easier to get an accurate picture of your earned income if you are employed by a third party employer.  Third-party employers typically do not care about what your child support obligation will be, and so they have no incentive to misrepresent what you earn.  Moreover, falsifying income records can get an employer in criminal trouble at the state and federal government level, and if they try to underpay you, you usually raise a ruckus to ensure you’re paid what you are worth.  So most third-party employers play it straight when reporting income on paychecks.

Self-employed people are another story.  When you’re self-employed, you can control how much or how little you are paid.  And when you are embroiled in a divorce action, it is tempting to skew your income reporting to reflect an artificially or inaccurately reported income to keep your child support obligation low.  Don’t try to fudge your income.  No, really, don’t do it.  Don’t even try.  First, it’s morally wrong.[1]  Second, if you are caught, your credibility in the eyes of the court takes a nose dive.

The Utah Code provides that gross income from self-employment or operation of a business must be calculated by subtracting necessary expenses required for self-employment or business operation from gross receipts.  This means that all you can deduct from your self-employment income are those expenses that you need to run the business.  Just because you may qualify to make all kinds of state and federal tax law “business deductions” for income tax purposes does not mean these deductions are “necessary” to operate your business.  “Gross income determined under this subsection may differ from the amount of business income determined for tax purposes.”  Utah Code § 78B-12-203(4)(b).  Make sure you understand that distinction, or you’ll be in for a rude awakening when it comes to calculating child support.

The Utah Code provides that “the income and expenses from self-employment or operation of a business shall be reviewed to determine an appropriate level of gross income available to the parent to satisfy a child support award,” and that “[o]nly those expenses necessary to allow the business to operate at a reasonable level may be deducted from gross receipts.”

How do I calculate my gross monthly income when my monthly income fluctuates from month to month?

Utah Code § 78B-12-203(5)

When possible, gross income should first be computed on an annual basis and then recalculated to determine the average gross monthly income.  Utah Code § 78B-12-203(5)(a).

What information do I need to provide to the court and to the opposing party?

Each parent shall provide verification of current income.

Each parent shall provide year-to-date pay stubs or employer statements and complete copies of tax returns from at least the most recent year unless the court finds the verification is not reasonably available.

Verification of income from records maintained by the Department of Workforce Services may be substituted for pay stubs, employer statements, and income tax returns.

What if a party is unemployed?  Do we base child support on $0 of income?

What if I am accused of being underemployed or I accuse the opposing party of being underemployed?

Utah Code § 78B-12-203(5)(c)

Historical and current earnings shall be used to determine whether an underemployment or overemployment situation exists.

Utah Code § 78B-12-203(7)

Income can be imputed to a parent if that parent is able to work, but is unemployed or determined to be underemployed.   To “impute income”  to someone means to credit him with a certain income amount that he is deemed capable of earning, even if he is not currently earning it.

If income is imputed to a parent, the income shall be based upon employment potential and probable earnings as derived from employment opportunities, work history, occupation qualifications, and prevailing earnings for persons of similar backgrounds in the community, or the median earning for persons in the same occupation in the same geographical area as found in the statistics maintained by the Bureau of Labor Statistics.

Income may not be imputed to a parent unless:

• the parent stipulates to the amount imputed; or
• the parent defaults; or
• in contested cases, a hearing is held and the judge in a judicial proceeding or the presiding officer in an administrative proceeding enters findings of fact as to the evidentiary basis for the imputation.

If a parent has no recent work history or a parent’s occupation is unknown, income shall be imputed at least at the federal minimum wage for a 40-hour work week. To impute a greater income, the judge in a judicial proceeding or the presiding officer in an administrative proceeding shall enter specific findings of fact as to the evidentiary basis for the imputation.

But why use gross income to determine child support?  I have child care expenses that are almost equal to what I could earn.

I am disabled.

I don’t earn much, if any, money now because I am training for a job.

Utah Code § 78B-12-203(7)(d)

Income may not be imputed if any of the following conditions exist and the condition is not of a temporary nature:

• the reasonable costs of child care for the parents’ minor children approach or equal the amount of income the custodial parent can earn;
• a parent is physically or mentally unable to earn minimum wage;
• a parent is engaged in career or occupational training to establish basic job skills; or
• unusual emotional or physical needs of a child require the custodial parent’s presence in the home.

My child does not need child support because she earns enough money to take care of herself.

Utah Code § 78B-12-203(8)

Gross income may not include the earnings of a minor child who is the subject of a child support award nor benefits to a minor child in the child’s own right such as Supplemental Security Income.

Social Security benefits received by a child due to the earnings of a parent shall be credited as child support to the parent upon whose earning record it is based, by crediting the amount against the potential obligation of that parent. Other unearned income of a child may be considered as income to a parent depending upon the circumstances of each case.

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