How Child Support Is Determined With a Fluctuating Income
Protecting children should be at the top of every parent's priority list. That is why determining fair child support payments allow parents to cover their children’s needs. However, a fluctuating income may be difficult to establish fair child support payments. Also, understanding how fluctuating income affects child support is a key consideration.
At Curiale Hostnik PLLC, we put families first. We work hard to support families in Tacoma, Washington, and cities throughout Pierce County, including Puyallup, Gig Harbor, University Place, and Lakewood.
Factors Considered in Child Support Calculation
In 2021, a reported 10.3 million Americans were listed as self-employed. While these figures are encouraging for the economy, they do come with a downside. Self-employed individuals tend to have fluctuating incomes. For child support calculation purposes, this situation can be quite complex.
When calculating child support, the following factors come into play:
The child’s age and specific needs.
The custodial parent’s employment and financial situation.
The financial resources available to the child.
The non-custodial parent’s employment status and income.
Alimony or spousal support paid.
Any special needs the child may require.
In particular, the non-custodial parent’s income represents a significant factor. It is much easier to determine child support payments on a stable income. However, it can be tough to set a monthly payment when self-employed.
When the non-custodial parent has a fluctuating income, the calculation process is based on the average income over a specific period.
Circumstances in Which Income May Fluctuate
The following are circumstances in which the non-custodial parent’s income may fluctuate:
The non-custodial parent receives performance bonuses or bonuses dependent on company results.
Overtime payments that do not represent a steady income stream.
Commissions paid as a percentage of sales or company performance.
The non-custodial parent is self-employed or is a business owner.
Second jobs or side gigs that do not represent a steady income stream.
These income sources factor into the overall child support calculation scheme. However, they do not accurately reflect the non-custodial parent’s income since they do not represent a steady income stream. In such cases, the court asks non-custodial parents to report every source of income in order to determine an estimate of how much the non-custodial parent typically earns weekly or monthly.
How Is Fluctuating Income Calculated for Child Support?
In most cases, child support may represent up to 30% of a non-custodial parent’s income. When the non-custodial parent has a steady income, child support is calculated based on the number of children and their needs. From there, the amount is compared to the non-custodial parent’s income. The child support amount is fixed accordingly.
However, when the non-custodial parent has a fluctuating income, the non-custodial parent must report all sources of income. The first place to start is income tax statements. Income tax statements provide a basis for determining an estimated income.
Additionally, fluctuating income may be calculated as the monthly average over a two-year span. Considering that non-recurring income sources such as commissions, bonuses, and overtime may drive the average up or down, working with an average allows the court to fix a reasonable amount based on the non-custodial parent’s income and the child’s needs.
Please note that imputed income, that is, non-cash, non-taxable benefits, do not factor into child support calculations. For instance, employee benefits such as gym memberships, employee discounts, or fuel reimbursements do not typically factor into determining child support payments. As a result, the basis for child support calculation is monetary, taxable income.
Speak With an Experienced Attorney
At Curiale Hostnik PLLC, we work hard to find the best solution to protect children’s needs. We collaborate with parents to find the best solution for all parties involved.
Speak with an experienced attorney who can provide guidance. After all, children are at the top of our priority list. Reach out today to schedule a consultation. We proudly serve clients in Tacoma, Pierce County, Puyallup, Gig Harbor, University Place, and Lakewood, Washington.