Whenever the support of a minor child is at issue, the Court may order either or both parents to pay any amount necessary for the child’s support. In Orange County, a hearing on the issue of child support is set by the filing of a Request for Order (RFO) by one of the parties, or in some cases, by the County of Orange, Department of Child Support Services. Upon the filing of an RFO, the clerk will set a hearing date about 45 days after filing. If you have filed an RFO or are considering filing an RFO, or if you have been recently served with an RFO, read on to find out what to expect at a child support hearing.
Let’s start with California’s statewide formula used to calculate base child support.
How Child Support is Calculated: The “Guideline Calculator”
If you are so inclined, you can read about the formula in Family Code Section 4055, which is linked here. Application of the formula results in a monthly guideline child support figure. Absent extraordinary circumstances, the Court must follow the guideline, unless the parties have stipulated to a child support order that varies from the guideline. In Orange County, judicial officers use one of two computer programs to calculate child support: X-Spouse or DissoMaster. If Department of Child Support Services is involved in your case, the judicial officer applies the child support calculator on its website, linked here:
These programs apply the statewide formula to achieve a monthly guideline child support order. The most important components of the formula are: 1) how many children there are, 2) the percentage of parenting time each parent has with each child (timeshare) and 3) the monthly incomes of the parties. The formula also takes into account some expenses that a parent may have on a monthly basis. Expenses that will result in a higher guideline order for that parent are mortgage interest and real property taxes. Expenses that will result in a lower guideline order will be health insurance premiums, mandatory retirement, union dues and child support paid for children of other relationships.
How does my parenting time with the children factor in to child support?
Child support will usually be decided after you receive visitation orders. The percentage of time you receive with each minor child will be computed and placed into the child support calculator. The Department of Child Support Services has a visitation timeshare calculation chart, linked here:
Generally, more visitation for a parent equates to receiving better child support orders, regardless of whether you are paying child support or receiving it.
What is Considered “Income” for Child Support?
Family Code Section 4058 defines income for purposes of calculating child support:
(a) The annual gross income of each parent means income from whatever source derived, except as specified in subdivision (c) and includes, but is not limited to, the following:
(1) Income such as commissions, salaries, royalties, wages, bonuses, rents, dividends, pensions, interest, trust income, annuities, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, social security benefits, and spousal support actually received from a person not a party to the proceeding to establish a child support order under this article.
(2) Income from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business.
(3) In the discretion of the court, employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses, and other relevant facts.
(b) The court may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent with the best interests of the children.
(c) Annual gross income does not include any income derived from child support payments actually received, and income derived from any public assistance program, eligibility for which is based on a determination of need. Child support received by a party for children from another relationship shall not be included as part of that party’s gross or net income.
As you see the Code’s definition of “income” is fairly exhaustive. The computer program requires gross monthly income, or before tax income, to be entered into the calculator. From there, the computer figures out the “net” or after-tax monthly income available for the support of the minor children.
According to Orange County local rules, both parties must file a complete, current Income and Expense Declaration (FL-150) prior to any child support hearing. The FL-150 is signed by the party under penalty of perjury. This document is very important because the Court will rely on the information in the FL-150s to make child support orders. If you think the other party could underreport his or her income, consider hiring a Wilkinson & Finkbeiner Orange County child support attorney to give the court a clear picture of the other parent’s finances. Parties with W-2 income (salaried employees) should attach documentation for the last two months of earnings and bring the most recent year’s tax returns to the hearing. Self-employed parties must attach Profit and Loss Statements for the last two calendar years or the Schedule C from the most recent business tax return.
The method for determining the monthly income available for support varies depending on whether the party is self-employed. Generally, salaried employees and those receiving unemployment compensation will have printed statements indicating their earnings during the most recent pay period and year-to-date. If the party is receiving a uniform amount of money each pay period, then an average monthly figure over the year can be taken to determine that party’s income available for child support. If a party has a one-time bonus at the end of the year, the Court does not average the bonus into the average monthly income of the employee. Pursuant to the holding in Ostler v. Smith, the court will generally assign a portion to be paid to the other parent in a lump sum.
For self-employed parties, the calculation is a little more complicated. Family Code Section 4058(a)(2) defines income for self-employed parties as gross receipts less expenditures required for the operation of the business. The computer is looking for the self-employed party’s net monthly income from the business. The bad news for self-employed parties is that the IRS is more generous than the Family Code in what can be deducted as a business expense. Case law has found the following expenses to be non-deductible for child support purposes: depreciation, travel, meals and entertainment. Courts will be focused on the reasonableness of these claimed expenses. If the Court finds that these expenses are not required for the operation of the business or are over-claimed, the court will add the expenses back into the income available for child support.
Especially in high asset cases, it will be necessary to conduct copious discovery before the child support hearing. This may involve hiring a forensic accountant to testify as to the other party’s gross cash flow available for support, or if you are defending a child support motion, hiring an accountant who can vouch for the necessity of the claimed business expenses.
What if the Other Party is Under-Employed?
Pursuant to Family Code Section 4058(b), the Family Code grants the Court discretion to impute income to both parents in a child support case if doing so is in the best interest of the children. Several important cases have applied this section including the Regnery case. Imputation is the act of assigning a higher income to a parent which is commensurate with his or her capacity to earn. A typical situation is that one of the parents has a history of earning substantially more than he or she is now. The question is whether that parent can still earn income at that level. If the other parent is more than happy to be underemployed to avoid greater financial responsibilities, it may be necessary to hire a vocational examiner to perform an evaluation of the other’s party ability to earn and then testify at court about his or her findings.
A common scenario seen in Orange County child support cases is where a parent states that he or she is making ends meet by receiving loans from a family member or friend. While it is generally the case that loans are not income available for support, it is important to scrutinize whether these loans are disguised gifts. Under the holding of Marriage of Alter, regular, recurring gifts may be considered as income available for child support. Discovery of loan documentation is critical to determine the veracity of these alleged loans.
In some cases, a party will leave a higher-paying job to start a new business and then decide to defer his or her salary for a few years. In Marriage of Berger, the father loaned his start-up company $250,000, took a $2,000 per month salary and deferred $350,000 in salary. The Court held that deferred income must be considered as income available for support and based the child support order on the father’s deferred income.
Additions to Child Support
Once you have determined the parenting time of the parties and the monthly incomes available for support, you will have a ballpark figure for base child support. In addition to base child support, pursuant to Family Code Section 4062, both parents will usually be liable for one-half of child care needed so the custodial parent can work, and one-half of the child’s uninsured medical, dental, orthodontia and counseling fees. Other expenses that may be made payable are for travel related to visitation and the child’s education and extracurricular activities.
How does the Payment of Child Support Impact Child Custody Orders?
The family court treats the issue of child support and child custody separately, meaning that they are not the same issue. If a party requests child custody orders by filing a Request for Order, the issue of child support will not be on the list of “issues” for the judge to decide on the date of the hearing. The court will only address child support if one party requests that the issue be heard and decided.
Although child support and child custody are not the same issue, these issues certainly interrelate in a family law proceeding. The amount of parenting time that one parent has of a child directly impacts the requisite child support to be paid. The general way to think about this issue is the more parenting time that a party has with a child, the less child support they will pay (or the more they will receive from the other party). Requests for child support or child custody are almost always made concurrently by one party or the other.
The failure to pay child support generally should not have a bearing on the custody orders and parenting time given to that party. However, there might be other severe consequences, such as contempt, for the failure to pay. Since family court judges decide the entirety of issues, and not a jury, it is important to be in the judge’s good graces for all issues.
If you are involved in a child support case that may be going to court soon, contact Wilkinson & Finkbeiner today for a free consult to put yourself ahead of the game.