8/3/2017

Child Support: What is

Income?
Helen L. Wade
hwade@lawmissouri.com

OneDrive Link to Presentation

https://1drv.ms/f/s!ApQnBNyGngWHgrxPwwWbMCWWiroENA

Gross income
Gross income includes, but is not limited to, salaries, wages, commissions,
dividends, severance pay, pensions, interest, trust income, annuities,
partnership distributions, social security benefits, retirement benefits,
workers' compensation benefits, unemployment compensation benefits,
disability insurance benefits, social security disability benefits (SSD) due to a
parent's disability, veterans' disability benefits and military allowances for
subsistence and quarters.

Mo. Sup. Ct. R. Form 14

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Gross Income
This list, however, is not exclusive.

Heckman v. Heckman, 422 S.W.3d 336, 341 (Mo.App. W.D. 2013)

Gross Income: Trust income

Trust Income: When determining whether to include trust income and, if so, the amount to include in a
parent's gross income, a court or administrative agency shall consider all relevant factors, including:
(1) The authority of the parent under the trust to direct payment of monies from the trust, including any
authority to invade and control distribution of the trust corpus;
(2) The authority of the parent under the trust to make decisions concerning investment of the assets of the
trust;
(3) The realistic expectation that the parent will continue to receive the amount of trust income received
during the three years, or such time period as may be appropriate, immediately before the beginning of the
proceeding and during any other relevant time periods; and
(4) The validity of the reasons of the parent in making any adjustment in trust income from that received
during the three years, or such time period as may be appropriate, immediately before the beginning of the
proceeding and during any other relevant time periods.

Gross Income
Overtime compensation, bonuses, earnings from secondary employment,
recurring capital gains, prizes, retained earnings and significant employment-
related benefits may be included, in whole or in part, in gross income in
appropriate circumstances.

Mo. Sup. Ct. R. Form 14

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Gross Income: O/T & 2nd Jobs

(1) The consequence of exercise by the parent of periods of temporary
physical custody or visitation with the children who are the subject of this
proceeding on the parent's ability to receive overtime compensation or
earnings from secondary employment;
(2) The motivation of the parent in working overtime, including whether
overtime was a condition of employment, or in working secondary
employment during the three years, or such time period as may be
appropriate, immediately before the beginning of the proceeding and
during any other relevant time periods;

Gross Income: O/T & 2nd Jobs

(3) The amount of overtime compensation and earnings from secondary
employment received by the parent during the three years, or such time
period as may be appropriate, immediately before the beginning of the
proceeding and during any other relevant time periods;
(4) The realistic expectation that the parent will continue to receive the
amount of overtime compensation and earnings from secondary
employment received during the three years, or such time period as may be
appropriate, immediately before the beginning of the proceeding and during
any other relevant time periods; and

Gross Income: O/T & 2nd Jobs

(5) The number of additional dependents for whom the parent is financially
responsible, whether or not there is an existing court or administrative order
under which the parent is paying or receiving support.

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Second Jobs
The court had reasonable grounds for calculating the child support without the
secondary income in light of the joint custody arrangement that gave Father
significant parenting time. As the court explained: Although [Father] has had
additional employment in the past, the court finds that the custodial
arrangement for the minor child and the dissolution of the parties' marriage
make it unlikely that [Father] will continue the secondary employment.
Voinescu v. Kinkade, 270 S.W.3d 482, 488 (Mo.App. W.D. 2008)

Gross Income
If a parent is unemployed or found to be underemployed, gross income
may be based on imputed income.

Mo. Sup. Ct. R. Form 14

Gross Income: Imputation

(1) The parent's probable earnings based on the parent's work history during the
three years, or such time period as may be appropriate, immediately before the
beginning of the proceeding and during any other relevant time periods;
(2) The parent's occupational qualifications;
(3) The parent's employment potential;
(4) The available job opportunities in the community; and
(5) Whether the parent is custodian of a child whose condition or circumstances
make it appropriate that the parent not be required to seek employment outside the
home.

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Gross Income: Imputation

If income and, where appropriate, reasonable work-related childcare costs
are imputed in calculating the presumed child support amount payable to an
unemployed parent entitled to receive support, then the support ordered paid
by the parent obligated to pay support shall not exceed the presumed child
support amount payable if these items are not imputed.

Imputation of Income
Under In re marriage of Neu, 167 S.W. 3d 791 (Mo.App. E.D.2005), a trial court may not treat

imputation of income on its Form 14 calculation differently than in its maintenance calculation

unless there is an evidentiary basis to do so. The principles relative to reduction and

imputation of a spouse's income in child support cases are equally applicable in modification

of maintenance cases. Monnig v. Monnig, 53 S.W.3d 241, 248 (Mo.App. W.D.2001), quoting

Ramsey v. Ramsey, 965 S.W.2d 365, 372 (Mo.App. E.D.1998)

Imputation of Income
A trial court may impute income to a spouse based upon what he or she
could earn using his or her best efforts to gain employment suitable to his or
her capabilities. In re Marriage of Cranor, 78 S.W.3d 150, 157 (Mo.App.2002) .
Imputing income depends upon the facts and must be determined on a case-
by-case basis. Hill v. Hill, 53 S.W.3d 114, 117 (Mo. banc 2001).

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Imputation of Income

In Sturgeon, Husband challenged the trial courts decision to impute only minimum
wage to Wife when calculating maintenance and child support. Wife had a tenth

grade education, held only low paying jobs each for less than one year, and earned

a maximum of $4.30 per hour. Sturgeon v. Sturgeon, 849 S.W.2d 171,

(Mo.App.E.D.1993)

Imputation of Income
Under Jones v. Jones, 958 S.W.2d 307 (Mo.App.W.D.1999) the Western District
stated [w]e would be reluctant to approve any level of attribution below
minimum wage for a person capable of full-time employment. In that case,
the trial court imputed less than minimum wage to a Father in a child
support case. The appellate court did not reverse the trial court, but in so
holding, stated if the trial court had not also required Dennis to share in the
thousands of dollars of the children's post-secondary educational costs, we
would be shocked at this decision, and would find an abuse of discretion for
failure to attribute at least minimum wage earnings to [Father]

Imputation of Income
The theory behind imputing income to a spouse/parent is directed toward
preventing a spouse from escaping responsibilities to the family by deliberately or
voluntarily reducing his or her income. Buchholz v. Buchholz, 166 S.W.3d 146, 152
(Mo.App. S.D.2005). Imputation of income is proper where a parent has
voluntarily reduced his or her income without justification. Peniston v. Peniston, 161
S.W.3d 428, 434 (Mo.App. W.D.2005). The most common scenario for voluntary
reduction of income without justification is where a parent deliberately quits work
to reduce his or her child support. Id.

Cross v. Cross, 318 S.W.3d 187, 192 (Mo.App. W.D. 2010)

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Gross Income: Bonuses

When determining whether to include bonuses and, if so, the amount to
include in a parent's gross income, a court or administrative agency shall
consider all relevant factors, including:
(1) The consequence of exercise by the parent of periods of temporary
physical custody or visitation with the children who are the subject of this
proceeding on the parent's ability to receive a bonus;

Gross Income: Bonuses

(2) The motivation of the parent in earning bonuses during the three years, or
such time period as may be appropriate, immediately before the beginning of
the proceeding and during any other relevant time periods;
(3) The amount of the bonuses received by the parent during the three years,
or such time period as may be appropriate, immediately before the
beginning of the proceeding and during any other relevant time periods;

Gross Income: Bonuses

(4) The realistic expectation that the parent will continue to receive the
amount of the bonuses received during the three years, or such time period as
may be appropriate, immediately before the beginning of the proceeding and
during any other relevant time periods; and
(5) The number of additional dependents for whom the parent is financially
responsible, whether or not there is an existing court or administrative order
under which the parent is paying or receiving support.

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Gross Income: Capital Gains

(1) The amount of capital gains income received by the parent during the three
years, or such time period as may be appropriate, immediately before the
beginning of the proceeding and during any other relevant time periods;
(2) The realistic expectation that the parent will continue to receive the
amount of capital gains income received during the three years, or such time
period as may be appropriate, immediately before the beginning of the
proceeding and during any other relevant time periods;

Gross Income: Capital Gains

(3) The validity of the reasons of the parent in making any adjustment in
capital gains income from that received during the three years, or such time
period as may be appropriate, immediately before the beginning of the
proceeding and during any other relevant time periods.

Gross Income: Retained Earnings

(1) Whether reinvestment of the business' income is an ordinary and
necessary expense to allow the business to operate at a reasonable level;
(2) Whether reinvestment of the business' income is intended for
maintenance of the business or growth of the business;
(3) Whether reinvestment of the business' income is reasonable based on
sound business practices; and
(4) The validity of the reasons of the parent for reinvestment of the
business' income.

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Gross Income: non-taxable income &

employment benefits
Non-taxable income and significant employment-related benefits may be
converted in appropriate circumstances to gross income through
applicable federal and state income tax tables.

Per-Diem Payments
Per diem payments alleged by a parent to be expended for employment-
related expenses are an employment-related benefit. If significant, those
benefits may be included in gross income for the presumptive child support
calculation.

Buckner v. Jordan, 952 S.W.2d 710, 712 (Mo. 1997)

Per-Diem Payments
Superficially, the result may seem inequitable where the payment to the
employee constitutes reimbursement for expenses directly related to the
employer's business. However, the inequity in such cases is abated by the trial
court's ability to deviate from a presumptive child support amount that is
unjust or inappropriate.

Buckner v. Jordan, 952 S.W.2d 710, 712 (Mo. 1997)

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Per-Diem Payments
Among the relevant factors specified as justifying deviations from the
presumptive amount is the financial resources and needs of the parents.
Rule 88.01(b). The financial needs of a parent may include the need to
expend funds included in gross income in order to maintain employment.

Buckner v. Jordan, 952 S.W.2d 710, 712 (Mo. 1997)

Per-Diem Payments
Where a parent rebuts the presumptive child support amount by presenting
credible evidence that a significant portion of gross income is spent on
reasonable and necessary employment-related expenses, the trial court has
discretion to deviate from the presumed child support amount after making a
written or specific finding on the record that the Form 14 amounts are unjust
or inappropriate.

Buckner v. Jordan, 952 S.W.2d 710, 712 (Mo. 1997)

Non-Taxable Income & Employment Related

Benefits
Fulton v. Adams, 924 S.W.2d 548, 554 (Mo.App.1996): pre-tax flex plan
benefits were appropriately considered as income in making Form 14
calculations
Roberts v. Roberts, 847 S.W.2d 108, 109 (Mo.App.1992): a court may include an
employer's contributions to a retirement plan in calculating PCSA where the
employer was wholly owned by the parent and its sole employee was the
parent

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Gross Income: Self Employment Income

Self-Employment Income: Gross income from an unincorporated business is

the net profit or net loss on the schedules filed as part of the parent's
federal income tax return. However, expense reimbursements or in kind
payments by the business to pay for expenses of the parent that are personal
in nature and not business related may be income to the parent. Therefore,
gross income of the parent for purposes of computing the presumed child
support amount may differ from the net profit or net loss of the business
for income tax purposes.

Unincorporated Business
Because corporations had chosen Subchapter S status under Internal
Revenue law, they were taxable substantially as is done with a partnership. In
that arrangement, no taxes are assessed at the corporate level but rather the
income and losses (including depreciation) are passed through to the
individual tax returns of the shareholders. The parties' tax returns indicate
reductions in income for depreciation of farm assets, and 179 deductions
from one of the corporations.

Thill v. Thill, 26 S.W.3d 199, 207 (Mo.App. W.D. 2000)

Self-Employment Income
Where complicated business and tax status applies, the partnership and
Subchapter S income reflected on the individual's tax return may not
represent the true amount of cash or benefit that may be available to the
parent and therefore, for the support of the child.

Thill v. Thill, 26 S.W.3d 199, 207 (Mo.App. W.D. 2000)

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Gross Income
If a parent receives rents or royalties or is self-employed, in a sole
proprietorship, or business with joint ownership, gross income is gross
receipts minus the ordinary and necessary expenses incurred to produce such
receipts. Depreciation, investment tax credits and other non-cash reductions
of gross receipts may be excluded from such ordinary and necessary
expenses.

Mo. Sup. Ct. R. Form 14

Gross Income
Income for purposes of computing the presumed child support amount
consists of a financial benefit or money received by a parent that could have
a positive impact on the parent's ability to support the parent's children.

Mo. Sup. Ct. R. Form 14

Stock
Wofford v. Wofford, 991 S.W.2d 194, 198 (Mo.App.1999) : if employee can
currently withdraw and sell stock given to him as part of an employer
compensation plan than such stock would relate to the employee's present
ability to pay child support
If the stock produces dividends, retained earnings, or a capital gain from sale
of the stock, these earnings are included in a calculation of gross income.
Heckman v. Heckman, 422 S.W.3d 336, 342 (Mo.App. W.D. 2013)

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NOT Gross Income

Excluded from gross income is temporary assistance for needy families
(TANF) payments, Medicaid benefits, supplemental security income (SSI)
benefits, social security disability (SSD) benefits received on behalf of a
child, food stamps, general assistance benefits, other public assistance
benefits having eligibility based on income, and child support received for
children not the subject of this proceeding.
Mo. Sup. Ct. R. Form 14

Income: The question of maintenance

Prior to the calculation of child support, the question of maintenance must be resolved.
RSMO 452.335.1 sets forth, in relevant part, the following directive:
In a proceeding for dissolution of marriage the court may grant a maintenance order to either
spouse, but only if it finds that the spouse seeking maintenance:

(1) Lacks sufficient property, including marital property apportioned to him, to provide for his
reasonable needs; and

(2) Is unable to support himself through appropriate employment or is the custodian of a child whose
condition or circumstances make it appropriate that the custodian not be required to seek employment
outside the home. (Emphasis added)

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