In Michigan, when determining a parent’s child support obligation, the very first step that the court takes is to figure out both the parents’ net incomes. It is important to understand that for the purposes of child support, net income is not the individuals’ take-home pay. Instead, the court considers all pertinent aspects of the parents’ financial circumstances in child support cases.
Income for child support determination purposes includes bonuses, commissions, overtime pay, wages and other potential income from one’s employment, which could be seasonal employment, as well. Additionally, other income that is taken into consideration during child support calculations is any distribution of profits from a retirement fund or deferred compensation account, unemployment benefits, Social Security benefits and the like. If a parent regularly receives goods or in-kind services, such as a housing allowance or meal reimbursement, then those benefits may be considered as income, too. Alimony and spousal support paid to a parent by another party who is not the other parent in the child support case also can be considered to be income.
For self-employed persons, the determination of income is complex, but earnings generated from the business are taken into account, as well as the manner in which income is reported on tax returns.
When it comes to military spouses, military specialty pay, veterans’ benefits, G.I. benefits and other military allowances are taken into consideration.
In some cases, a parent may become deliberately under-employed in order to avoid paying child support. In such cases, a court may impute income to the parent. However, any income imputation is based on a 40-hour work week and typically does not include any overtime. In imputing income, the court considers several factors, including, but not limited to, previous employment history, educational level, physical and mental ability to sustain and seek employment, earnest seeking of employment and any significant changes in economic conditions.
Parents who are involved in a child support dispute or case and who want to understand how their incomes will be used to calculate child support, may find it helpful to talk with a family law attorney to figure out what documentation is necessary and what their next steps should be.
Source: Michigan Courts Child Support Formula Manual, “Determining Income,” accessed Sept. 23, 2014