Friday, October 23, 2020

Income Defined Broadly for Child Support

Law Matters

One of the hard-fought issues in divorce cases is child support. In an effort to minimize that battle, the legislature has frequently addressed the issue. That effort was driven, in part, by the federal Family Support Act of 1988. That Act requires every state to adopt a set of child support guidelines to serve as the basis for awarding child support. The guidelines are applied unless the court determines variation is appropriate. Judges do not encourage variance.

Florida’s child support guidelines are found at Section 61.30 of Florida Statutes. The guidelines establish financial support obligation of parents based largely on the income of each parent. The guidelines generally settle the issue of child support, but the parties can argue the issue of income. Resolving that argument has resulted in numerous court decisions and the argument continues in other cases.

The legislature tried to limit the argument about income by adopting a list of items to be included in income. The statute states gross income includes but is not limited to (1) salary or wages; (2) bonuses, commissions, allowances, overtime, tips and similar payments; (3) business income from self-employment, partnerships, corporations and independent contracts and goes on to explain that business income means gross receipts minus ordinary and necessary expenses required to produce income; (4) disability benefits; (5) workers compensation benefits and settlements; (6) reemployment assistance or unemployment compensation; (7) pension, retirement or annuity payments; (8) Social Security; (9) support from a previous marriage; (10) interest and dividends; (11) rental income defined as gross receipts minus ordinary and necessary expenses required to produce the income; (12) income from royalties, trusts or estates; (13) reimbursed expenses or in-kind payments to the extent they reduce living expenses; and (14) gains from dealings in property, unless the gain is nonrecurring.

The legislature addressed another issue later in the statute. That issue is the unemployed or underemployed parent. The legislature understood that sometimes a parent seeks to eliminate or reduce child support by reducing income. The easiest way to do that is to be unemployed or get a low paying job while arguing the issue of child support. The statute mandates that income be imputed to an unemployed or underemployed parent if the court finds that status to be voluntary on the parent’s part; unless the court determines that the status is due to physical or mental incapacity or circumstances over which the parent has no control.

The statute directs that employment potential and probable earnings for an unemployed or underemployed parent are to be determined based upon the parent’s recent work history, occupational qualifications and prevailing earnings level in the community if such information is available. The statute even addresses the situation when a parent fails to provide necessary information or job information in the community is not produced, by providing a rebuttable presumption that the parent has income equivalent to the median income of year-round full-time workers taken from current population reports or placing reports published by the United States Bureau of the Census. If the court finds it necessary for a parent to stay home with the child who is the subject of a child support proceeding, the court can refuse to impute income.

Convincing a court to impute income requires evidence. The task is not always easy. To impute income at an amount other than the median income of year-round full-time workers derived from United States Bureau of the Census information, the court must make specific findings of fact and the party seeking to impute income has the burden of presenting competent and substantial evidence that the unemployment or underemployment is voluntary. The proponent must also identify the amount and source of the imputed income through evidence of available employment for which the parent is qualified and taking into consideration the parties’ time-sharing schedule with the child.

A parent is sometimes surprised by what Florida cases include in income. Income from a second job is included as is overtime and even bonus payments. In-kind contributions from an employee or business are included if they reduce personal living expenses. That means such employment perk’s as automobile expenses, cell phone and meal allowance are included in income for child support calculations. In one case, the court imputed income based on the rental value of the home provided to him by the father’s parents, where the home had been provided for an extended period and the father’s mother testified the free housing would continue.

The statute states that income records more than 5 years old may not be the basis for imputing income nor may the court impute income at a level that a party has never earned; unless recently acquired licensed, certified real licensed or recertified and is qualified for more income based upon the location of the parent.

The statute recognizes that gross income does not equal available income. Child support is based upon available income. Excluded from income for child support purposes are (1) federal state and local income tax deductions; (2) Social Security and Medicare contributions; (3) mandatory union dues; (4) mandatory retirement payments; (5) health insurance payments; (6) court-ordered support for their children which is actually paid; and (7) spousal support paid pursuant to a court order from a previous marriage or the marriage before the court.

After determining income, the statute provides guidelines to be applied to the combined net income of both parents to determine the minimum child support need. The legislature’s idea is that as income goes up, the child support level increases. Applying the guidelines uses a formula that makes adjustments based upon the time a child spends with each parent, expenses paid by a parent, extraordinary expenses or needs of the child and allocating each parent’s obligation based roughly on their proportional incomes.

The statute helps eliminate much of the argument between parents about child support. However, issues such as actual income, income in-kind, imputed income and whether expenses paid by a parent are truly necessary remain fertile fields for dispute. That places a premium on good legal advice in these cases.

William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice. 

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