Arizona Child Support Guidelines Part III. How is income calculated?

Arizona Child Support Guidelines Part III. How is income calculated?

The new Arizona 2022 Child Support Guidelines’ Table of Contents, Section II is titled “Determining Income”. That Section takes us through:

  • What is included in CS income?
  • What is not included in CS income?
  • When is overtime included in CS income?
  • When is CS income attributed even if not actually being earned?
  • When is income not attributed for purposes of calculating CS?

There’s a lot of information here, and some of it was not included in previous Guidelines’ versions.  Some of this new information comes from case law.  In making changes to the Guidelines, the committee reviewed family law case decisions (both reported opinions and memorandum decisions) from 2016-2020 involving child support.  Those decisions and opinions can be found here if you’re interested in specific case names.  

The Income Section (II) starts with a premise that people often don’t understand:  the term “child support income” does not have the same meaning as “gross income” as used for tax purposes.   Child Support Income can include many sources of income that the IRS does NOT tax.  One easy example is gifts — we don’t report gift income (at $15,000/ year or less) on tax returns, and those amounts are not taxable.  But if those gifts are received, they ARE included in Child Support Income when CS is calculated.

Child Support Income can also include other sources of income whether or not those things are reported on tax returns and whether or not the IRS gets a piece of those items.   This was stated in previous versions of the Guidelines but it stated more clearly now.

If income is occasional – it doesn’t recur year after year – the court has discretion about whether to consider that income in calculating CS.  In other words — It Depends.   The court needs to hear what’s going on with that income and whether it makes sense, and is fair, if non-recurring income should be included in calculating CS.  Sometimes it might be included, and sometimes not.

The court has discretion to average fluctuating income over periods exceeding one year.  So if a person shows income over several years of Year 1:  $20,000; Year 2:   $80,000; Year 3:   $15,000; and Year 4:  $35,000, then after hearing evidence, the court MIGHT come up with an average income of $37,500 (the average of those four amounts).  Or, the court might find it more equitable to throw out the high year and average just the other 3 years (which comes out to $23,333/ year), or the court could even throw out the high year and the low year, for an average of $27,500 ($20,000 + $35,000 divided by 2 years).     The discretion of the court means “it depends on the evidence”.

Expense reimbursements are again mentioned.  Section II(A)(1)(f)    These are included if they “reduce personal living expenses”.    If someone gets reimbursement for every single lunch, that likely reduces personal living expenses, as most of us have to pay for our own lunches.  (This is not new.)

Military pay is expressly discussed in Section II(A)(1)(g).  This is new.

What is not included in CS income?  This is a fairly short section (as so many things are included as income), but it mentions that anything received as child support does not count (all child support is presumed to go for the child’s needs); TANF or other supplemental income (SSI, nutritional assistance), and adoption subsidies and the like are not added to income to calculate CS.   The distribution of property in a divorce doesn’t count except to the extent property produces some income (such as dividends, interest, or other income).   Income of a parent’s new spouse is not included in any CS calculation as that third party has no legal duty to support someone else’s child.

Overtime.  If someone works more than full time (either overtime, or a second job), generally only the full-time employment income (one job) will be included.  If a parent had historically worked overtime when the family was together, the Guidelines recognize that that person might choose to reduce hours or not work overtime in order to have more interaction with the child.  But the court might still consider income more than full-time employment if that income was (a) historically earned; and (b) is anticipated to continue.    The extra should not be included in CS income if it requires an extraordinary work regimen, and the court should consider all circumstances of the extra work, including hours, conditions, and a person’s medical or personal circumstances.   Most of this section is from prior Guidelines, but is now set out in its own section which makes it clearer.

Attributing Income.  First, what is attribution?    This is a concept that’s largely misunderstood by the general public (and sometimes by attorneys).   Attributed income means income that the court believes a person could have, if that person elected to work or work for a higher wage. Someone who says “I’m going to quit my job if I’m ordered to pay child support” will be attributed income at what he or she could have earned but for quitting their job.   Generally, most people are attributed at least minimum wage (currently $12.80/ hour or about $2200/ month in Arizona) unless that person can show he or she is unable to work due to a disability.   Even a person making more than minimum wage could be attributed a higher income if their skills, experience, and background qualify them to earn more than they’re actually making.  And the court can attribute income related to property owned.   

The court can also attribute income to someone if they’re getting something for free that reduces their living expenses.  So if someone is allowed to live in a house or apartment free of charge, because they have a friend or know the right people, the reasonable rental value of where they’re living can be attributed as additional income to them.  The same applies if someone has the free use of a vehicle, or gets other free living-related benefits from friends or family.  

As a reminder, the 2022 Child Support Guidelines are found here and the online calculator to calculate 2022 child support is here.

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