At Ciyou & Dixon, P.C., we observe many divorce and custody disputes are centered around child support issues, and especially, how to determine weekly gross income for child support purposes. Often, it is more than simply base monthly salary divided by 4.3.
More typically, the matter is a complex query into irregular sources of income or imputed income. Bonuses are a good, and common, example. With irregular income (certain bonuses by this example and blog post), the calculation process becomes complex, subjective and less black-and-white in application.
Clearly, the child should obtain some benefit of bonuses, as he or she would have had the marriage remained intact. The Indiana Child Support Guidelines address the issue of bonuses and their inclusion in total income. The Commentary to the Indiana Child Support Guideline 3 (A) states, in part, as follows:
“There are numerous forms of income that are irregular or non-guaranteed, which cause difficulty in accurately determining the gross income of the party. Overtime, commissions, bonuses, periodic partnership distributions, voluntary extra work and extra hours worked by a professional are all illustrations, but far from an all-inclusive list, of such items. Each is includable in the total income approach taken by the Guidelines, but each is also very fact-sensitive.”
The problem is for many employees, bonuses are not guaranteed (and not rightly accounted for as a component of gross weekly income?). Such bonuses are either based on individual employee or company performance, and/or shift as the economy shifts. In other cases, a parent may receive a steady bonus that varies very little over time. How can these be treated the same way and fairly addressed in child support?
They cannot in the weekly child support obligation, nor do the Guidelines mandate such. However, they are nevertheless includable in total income. Generally, if bonuses are stable, and are an expected and consistent part of one’s income, the Court will be more likely to include these bonuses, or a portion or percentage of them, as regular weekly gross income used for computation of a weekly support obligation.
Notwithstanding, parties to domestic litigation should remain mindful that they are not hamstrung by this approach if it would likely yield overpayment or underpayment of child support or would otherwise create a windfall for the custodial parent and potentially create harm and a cash flow problem for the parent paying support.
This could easily be the case with mandatory income withholding orders now required by federal law, if the payor parent does not receive a bonus that has been factored into weekly child support. The beauty of the Guidelines is they may be worked and applied in a way that fairly accounts for the unknowns (when and if they will be paid and in what amount) of some bonuses (and other irregular income); irregular income may be treated differently form case to case.
The Guidelines specify that each form of income is fact-sensitive as a calculation of income. This provides flexibility, and is where an attentive litigant, skilled lawyer, and dedicated judge can make the most out of what are sometimes bitter disputes and harsh realities associated with the breakup of a family.
In fact, in the Paternity of S.G.H., 913 N.E.2d 1265, 1269 (Ind.Ct.App.2009), the Indiana Court of Appeals reversed a trial court’s order regarding bonuses that required a child support modification proceeding or excluded the bonus from child support. In doing so, the Court of Appeals noted a preferred course or method under the Guidelines that could keep the litigants out of court proceedings:
determine the ration of the basic child support obligation (line 4 of the worksheet) to the combined weekly adjusted income (line 3 of the worksheet) and apply this ratio to the irregular income during a fixed period of time.
Thus, in circumstances where a bonus is speculative as to award and/or amount, this approach may be requested by the parties and adopted by the trial court in its discretion. This provides the child support benefit to the child, if the bonus is received. On the other hand, it does not penalize the parent paying child support if he or she does not receive a bonus.
Ciyou & Dixon, P.C. advocates hope readers take two (2) educational points from this blog. First, the Guidelines, while based on a mathematical model, have provisions that allow flexibility for the uncertainties and contingencies of life. Second, and a corollary consideration, for such to apply, the parties have to put on the evidence and connect it to the Guidelines (i.e., bonuses are not guaranteed and occur in an unknown amount).
If you have obtained insight into the flexibility of the Guidelines, this blog post has met its goal. A helpful and engaged litigant is one who understands the legal issue and the law. In child support, a great deal of this is achieved by reading the Indiana Child Support Rules and Guidelines and understanding their flexibility. Ciyou & Dixon, P.C. attorneys practice throughout the State of Indiana.