There are special issues associated with earning capacity. One such issue is salary history. Most states include overtime, predictable bonuses and commissions as income for purposes of calculating child support. If you have historically worked a certain amount of overtime, received a bonus each year, or earned a commission on sales, the court will most likely consider these “extras” as a part of your regular income for purposes of calculating the amount of child support due.
In order to be fair, and to protect yourself in the event of a dispute, be inclusive in your calculations. Review your overtime, bonuses and commissions over the past five years. Have they been stable? Or were they linked to unusual circumstances which no longer exist? Are they regular, seasonal, or cyclical with the economy? Have market forces made bonuses erratic both in terms of amount and regularity? Has competition or new additions to the sales force eroded your commissions over time?
For instance, if you are a postal worker, and every Christmas you are required to work an enormous amount of overtime, average your income over the entire year. If your child support is based solely on your Christmas earnings, it will be much higher than is appropriate during the other eleven months of the year. If you work in construction, the summer months may be very busy, but you may be unemployed during the winter time. If you are a daycare provider, your summers are probably busier than the rest of the year. If you are a commissioned salesperson, make sure that your income history–and future– is presented realistically. Click here for more information.
A striking example of this situation was Henry, a commissioned salesperson for an office supply company which had been owned by his father. When his father retired, he passed his accounts on to Henry, who continued to work in the small, family owned business. He earned a very comfortable living….until the office supply superstores invaded his territory. Suddenly, his little Mom-and-Pop enterprise was turned upside down as competition entered the marketplace, eventually forcing him to sell the business to a mega-store. He was offered a job with the store, but had to start from scratch with no accounts to his name. His $350,000 per year income plummeted to less than $50,000. It was important that the judge take into account the new climate in which he was forced to work, and his new compensation structure. A salary history alone would have had devastating results on the Child Support Guidelines. The future became much more pertinent than the past. Click here for another terrific article.
Excerpted from Your Divorce Advisor: A Lawyer and a Psychologist Guide You Through the Legal and Emotional Landscape of Divorce (Simon & Schuster/Fireside 2001). For more information: http://www.yourdivorceadvisor.com/.
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- What are Child Support Guidelines?
- Personal and Fault Issues
- What Documents are Needed by the Court?
Tags: Child Support
