Are child support awards unpredictable?
The enactment of child support guidelines was an attempt to do away with arbitrariness. All guidelines start with the parentís ability to pay. This ability to pay is usually determined by the parentís actual income or other earnings, as would be reported to the IRS. This can include, but not limited, capital gains, stock and bond earnings, commission, bonuses, and interest.
Here is an example of how a state may define "Gross Income":
Determination of the Gross Income of the Parents:
NOTE: Terms such as "Gross Income" and "Adjusted Gross Income" as used in these guidelines do not have the same meaning as when they are used for tax purposes.
a. Gross income includes income from any source, and may include, but is not limited to, income from salaries, wages, commissions, bonuses, dividends, severance pay, pensions, interest, trust income, annuities, capital gains, social security benefits (subject to Section 24), worker’s compensation benefits, unemployment insurance benefits, disability insurance benefits, gifts, prizes, and spousal maintenance. Cash value shall be assigned to in-kind or other non-cash benefits. Seasonal or fluctuating income shall be annualized. Income from any source, which is not continuing or recurring in nature need not necessarily be deemed gross income for child support purposes. It is generally not expected that a parent will earn income greater than what would be earned from full-time employment.
b. Gross income does not include sums received as child support or benefits received from means-tested public assistance programs including, but not limited to, aid to families with dependent children, supplemental security income, food stamps and general assistance.
c. For income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation, gross income means gross receipts minus ordinary and necessary expenses required to produce income. Ordinary and necessary expenses do not include amounts determined by the court to be inappropriate for determining gross income for purposes of child support.
d. Expense reimbursements or benefits received by a parent in the course of employment or self-employment or operation of a business shall be counted as income if they are significant and reduce personal living expenses.
e. If a parent is unemployed or working below full earning capacity, the court may consider the reasons. If earnings are reduced as a matter of choice and not for reasonable cause, the court may attribute income to a parent up to his or her earning capacity. In accordance with Arizona Revised Statutes Section 25-320, income of at least minimum wage shall be attributed to a parent ordered to pay child support. If income is attributed to the parent receiving child support, appropriate childcare expenses may also be attributed.
f. Only income of persons having a legal duty of support shall be treated as income under the guidelines. For example, income of a parent’s new spouse is not treated as income of that parent.
g. The court shall not take into account the impact of the disposition of marital property except as provided in Arizona Revised Statutes Section 25-320.A.6. ("...excessive or abnormal expenditures, destruction, concealment or fraudulent disposition of community, joint tenancy and other property held in common.") or to the extent that such property generates income to a parent.
h. The Schedule of Basic Child Support Obligations is based on net income and converted to gross income for ease of application. The impact of income taxes has been considered in the Schedule.
Adjustments to Gross Income
a. The amount of court-ordered spousal maintenance actually paid and the amount of court- ordered child support of other children actually paid by the noncustodial parent or contributed by the custodial parent shall be deducted from the gross income of the paying or contributing parent. "Other children" means natural or adopted children who are not the subject of this particular child support determination.
b. Support of natural or adopted children not covered by a court order may be considered as an adjustment factor. Any adjustment will be made to gross income and the amount of any adjustment will be determined by a simplified application of the guidelines to determine the basic amount of support that would be ordered for the other children in question.