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Setting Child Support When Income Varies

One common concern I repeatedly hear from people is whether a variation in overtime (or income generally) will impact child support.

When the parent who owes child support regularly works overtime, receives bonuses or works on commission, and the income varies, these factors can make child support more difficult to calculate.

This short article addresses three ways of setting child support when income varies.

The child support statute reads pretty simply. In short, it provides that an obligor shall pay a statutory percentage of his net income for child support. The questions always remains, though, “What is the obligor’s net income?” When an obligor has regular employment that includes significant overtime (or commissions or regular bonuses) that vary, the determination of support is not an easy, straightforward mathematical formula.

When an obligor receives additional income in the form of overtime, commissions or bonuses, the first question is whether or not those additional sources of income are consistent and in regular amounts or inconsistent or in irregular amounts. If those additional sources of income are regular and consistent, they can be factored in with the obligor’s regular base pay, and a child support amount is easily determined. This will result in a fixed payment that does not change. A fixed amount is clear and easy for the court to enforce and is, therefore, preferred.

If the amount of the additional income varies and/or is inconsistent, the determination of child support becomes more complex, but not impossible to establish. The method of establishing the support amount, however, will depend on the cooperation of the parties, the willingness of the parties to share information, and the degree of trust they have for one another.

One option for dealing with variations in income is to set a base amount of support using the obligor’s consistent or base income. For example, if the obligor has a consistent 40 hour work week at a set hourly rate, the base child support would be based on this calculation. The support obligation for any additional income from bonuses, commission or overtime can be calculated each pay period at the same statutory percentage. The parent receiving the child support would want copies of the paystubs showing the additional income and the calculations used to determine the support amount. So long as there is some degree of trust, the obligor is willing to share this information and the receiving parent is able to verify the information, this is a workable solution.

A second option is to determine the average additional income over a period of time, such as a month, quarter, half of year, year, etc. The total average income, then, is used to calculate a fixed amount of support. The advantage of this option is that support is fixed, certain and easy to enforce. The obvious disadvantage is that an obligor may pay too much or too little support if the obligor’s actual income deviates much from the average that is set. This method is used in situations where there is a high degree of distrust between the parties or the obligor is unwilling to provide ongoing information regarding the additional income on a consistent basis.

A third option is what we would call a “true-up”. Under this scenario, a base amount of support is set using either option 1 or option 2. At the end of the year, however, the obligor is required to provide final paystubs and a W-2 to the other parent, and the parties would calculate the amount of support that should have been paid based upon the true amount of income of the obligor at the end of the year. If the obligor has overpaid his support, the overpayment amount would be paid back or credited against future child support moving forward. If the obligor has underpaid the support, the additional amount due would be paid within a set time frame.

This third options works well when both parties are concerned about achieving the correct amount of support being paid, the parties are able to communicate, and the obligor is willing to share the information necessary to make these determinations. It does not work well when there is a breakdown in communication or trust between the parties.

Attorneys and parties often get creative and come up with even different options that the ones described above. Unfortunately, as much as we try to achieve the correct amount of child support to be paid in every case and to make the amount and fair and reasonable, ultimately, achieving that ideal when one parent’s income deviates can be challenging. The best option for achieving that result may vary depending on the parties and the circumstances.

Even when income is usually steady and consistent, the paying parent may receive additional income through raises, bonuses or promotions that are not foreseeable. In these situations, child support may need to be addressed through a Motion to Modify Support based upon a substantial change in circumstances. But, this is a topic for another conversation. If you have any questions or concerns over the amount of support that is obligated to pay, do not hesitate to contact an attorney.