The parties were married for seventeen years and shared three children together. During the marriage, Husband worked as a teacher and contributed to a state-administered retirement plan. Wife was self-employed as a contract nurse.
Among its orders, the family court calculated child support based on Father’s wages ($4,553 per month) without including any of the employment benefits he received. After unsuccessfully filing a motion for a new trial, Mother appealed.
In her appeal, Mother argued that Father received various employment benefits, including employer contributions to retirement accounts, long-term disability premiums, and health and life insurance premiums, that totaled at least $12,739.58 per month. Mother argued that these benefits should be included in Father’s income for child support purposes.
Defining income for child support purposes
Arizona family courts use statewide child support guidelines. The Guidelines are not “law” but they are generally followed reasonably closely. The Guidelines define “income” far more broadly than even the IRS. Under Section II(A), the Guidelines define income to include “income from any source before any deductions or withholdings. Child Support Income may include salaries, wages, commissions, bonuses, dividends, severance pay, military pay, pensions, interest, trust income, annuities, capital gains, social security benefits (Subject to Section X.B), workers’ compensation benefits, unemployment insurance benefits, disability benefits, military disability benefits, recurring gifts, prizes, and spousal maintenance.”
The same section later states, “[e]xpense reimbursements or benefits a parent receives in the course of employment, self-employment, or the operation of a business are included as Child Support Income if they are significant and reduce personal living expenses. Cash value is assigned to in-kind or other non-cash employment benefits.”
This version of the Guidelines is more recent and a little bit different than the version that existed when the Hetherington case was decided. The previous version of the Guidelines essentially consolidated both of those quoted portions into the same section.
The Court of Appeals says employee benefits may be counted as income
Because this was a question of first impression, meaning that no published appeal previously answered the question whether benefits should be included in child support income, the Court of Appeals considered similar decisions from other states. It analyzed pages of citations from other states that typically included various benefits a parent received, including fringe benefits, as child support income.
Rather than holding that all benefits must be included, the Court of Appeals essentially stated that it should be a case-by-case determination by family courts. It acknowledged that inclusion of certain benefits could lead to a situation where a parent is obligated to pay child support based on “income” not really available to spend.
Conclusion
While the child support calculator was intended to bring some predictability and consistency to child support obligations, there is considerable discretion for family courts to determine its inputs. Almost nothing is totally straightforward, especially income. The Guidelines and case law give family courts discretion to include overtime or income from second jobs, recurring contributions or gifts from third parties, or even loans as income for child support. This discretion can lead to unfair outcomes, so it can be really valuable to consult with an experienced child support attorney to fully understand the possible outcomes in your case.