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How Do Courts Use Your Income to Calculate Child Support?

How Child Support Is Calculated

In California, courts will calculate the amount of child support a parent owes according to the statewide uniform guidelines outlined in California Family Code § 4050 et seq. These guidelines were adopted by the California legislature to establish uniform standards for calculating child support obligations that are also compliant with federal child support regulations.

According to the statutory guidelines, the amount of child support(CS) takes into account the total net monthly disposable incomes of the parties(TN), the percentage of time the higher earner spouse will have primary physical custody of the child (H%), the higher earner’s net monthly disposable income (HN), and a percentage representing the amount of both parties’ income allocated for child support, as prescribed by statute (K).

Under California Family Code § 4055, courts will apply the following formula to determine the amount a parent owes in child support:

CS = K [HN – (H %)(TN)]

Resources Included as Income for Calculating Child Support

In divorces involving issues of child support, the parties must make a complete and accurate disclosure of their income, assets, expenses, and liabilities. Such financial disclosures are legally required—failure to comply can be the basis for imposing sanctions on the offending party.

Financial disclosures allow the court to fashion a child support order that is accurate and consistent with the economic realities of the parties. The parties’ financial disclosures are presumed to be accurate and complete. Typically, the parties will complete and file an Income & Expense Declaration form (FL-150) along with their initial pleading, whether that be a petition for the dissolution of marriage or independent child custody and support action.

Net monthly disposable income is derived from the party’s annual gross income. For purposes of determining child support, courts have broadly interpreted “income” to include various sources, including:

  • Earnings and revenue from employment and income-producing assets, including salaries, insurance proceeds, government benefits, investments, and spousal support
  • Business revenues minus operating expenses
  • Employment benefits

Income, as defined by the California Family Code, parallels the definition under the Internal Revenue Code. As a result, an individual’s gross income as reflected by federal income tax returns is presumed to be correct for determining child support, unless evidence is available which shows the income reflected therein is not correct.

Income of Self-Employed Parties

In cases where a spouse is self-employed—such as in a solo professional practice—his or her income might fluctuate over time. Accurate documentation and records are particularly important in these cases because the court is restricted to make factual findings based on the information the parties provide.

Specific details regarding asset valuations are usually supported by expert testimony from a financial professional, such as an accountant, especially when the details of business income are complicated. In addition, self-employed individuals with varying incomes have an interest in providing comprehensive records of billings. If a self-employed attorney actually earns $1,500 for their practice in January, $2,000 in February, and $5,000 in March, then calculating net monthly income by determining an average would not accurately reflect the actual funds available to that attorney from which to pay support. Similarly, if the attorney only provided a billing statement for one month, their net income would be distorted.

Imputing Income

California courts have the discretion to consider a party’s earning capacity in place of actual income. This is known as “imputing income”; the court typically includes the potential income that a party is capable of earning even though the party does not actually earn and receive it.

The issue of imputed income may arise from a situation in which a party voluntarily chooses to work in a job that pays less than he or she is capable of earning, given his or her particular experience and background, in order to minimize financial obligations.

Under California law, courts will consider the following issues when determining whether to rely on a party’s earning capacity instead of actual income:

  • Ability to work, factoring their skills, experience, and qualifications
  • The opportunity to obtain work in a given area, and the rates paid for such work, considering an employer’s willingness to hire

Consult Bremer, Whyte, Brown & O’Meara to Learn More

If you have questions, concerns, or counsel regarding a legal matter involving Orange County family law, you should get in touch with our experienced family lawyers at Bremer Whyte Brown & O’Meara. Our legal team has years of valuable experience handling matters including child support.

Please call us at 949-229-8546 or contact us onlineto schedule an initial consultation about your case today.