The starting point for the calculation of child support is the tax returns for the year prior to commencement of your divorce. However, this is just the starting point as there are several factors which may lead the Court to enhance or adjust a party’s income when it considers the proper amount of child support. For instance, Courts may also look to your most recent pay stubs or your year to date income. The reason the Court will consider the current year’s income is that there may be a dramatic change in earnings from the filing of your latest tax return. There are two quick examples that demonstrate using last year’s tax return would be inadequate or unjustified. First, if you unexpectedly lose your job after your tax return has been filed. Clearly the award based on employment that you no longer have will be unduly burdensome to which you are set up to fail and be held in contempt of a court order. It must be remembered that this loss of income must be unexpected, such as your company downsized or terminated your department.
The Court will look into the facts and circumstances of a loss of employment to determine if it was involuntarily or if was initiated in order to avoid a proper order of support. If you lost your job through no fault of your own the Court will take that into consideration when calculating child support. If, however, you purposefully lost your job, by quitting or taking another job to lower your income, the Court may impute income to you in order to make up the difference in what your proper support obligation should be. This also comes into play when the non-custodial parent owns his/her own business and the tax returns do not adequately reflect the party’s true income for child support calculations.
The opposite is also true. For if you receive a significant pay raise after your taxes are filed then you may not be paying enough child support.
When calculating child support the Court will also investigate whether the non-custodial parent receives a bonus. Such bonuses may be reflected on pay stubs or in an employment contract. The Court will include these bonuses to the child support calculation. Just some of the other factors the Court will consider are: (1) investment income; (2) workers’ compensation benefits; (3) disability benefits; (4) veteran’s benefits; (5) pension and retirement benefits; (6) fellowships and stipends; and (7) annuity payments.
Additionally, the Court will consider the lifestyle of the child prior to commencement as it will attempt to maintain as close a lifestyle of the child as possible.
In sum, remember that while there the Court will start with the previous year’s tax returns and apply the Child Support Standards Act, there are also many considerations that will be considered to award the proper child support award as the courts take very seriously the best interests of the children.