Child Support Computation with Variable Incomes
We all know that under current law, child support is computed based on incomes, and the determination of incomes is the first step. Varibale incomes such as commissions or bonuses involve extra calculations. Our firm was involved in a recent case in the Supreme Court of Georgia that dealt with this situation. The case was STOWELL v.HUGUENARD, S10A1700, Supreme Court of Georgia, Decided February 28, 2011.
The opinion starts off with the basics, stating "According to the child support guidelines, the first step a court must take when calculating the presumptive amount of child support is to determine the monthly gross income of both parents. OCGA § 19-6-15 (b) (1). OCGA 19-6- 15 (m) (1) requires the court to use the child support worksheet, which should be attached to the final court order, to determine and calculate the presumptive amounts of child support."
The goal is to compute a sum certain as child support. The opinion emphasizes that: "This final calculation will result in "the presumptive amount of child support, which is a sum certain single payment due to the custodial parent." OCGA § 19-6-15 (b) (7)."
Many times, parties in support cases have a history of regular but variable income such as bonuses or commissions. Historical income is to be averaged to determine current income for child support purposes. Generally, when income history is variable, the court shall average such income over a reasonable period of time. But, the relevant statute also appears to authorize the alternative approach of setting support as a percentage of variable income.
The relevant statute is 19-6-15 (f) (1) (D). This statute provides for the treatment of income that may vary as to amount and/or timing when calculating gross income for purposes of determining child support as follows:
"Variable income such as commissions, bonuses, overtime pay, military bonuses, and dividends shall be averaged by the court or the jury over a reasonable period of time consistent with the circumstances of the case and added to a parent's fixed salary or wages to determine gross income. When income is received on an irregular, nonrecurring, or one-time basis, the court or the jury may, but is not required to, average or prorate the income over a reasonable specified period of time or require the parent to pay as a one-time support amount a percentage of his or her nonrecurring income, taking into consideration the percentage of recurring income of that parent."
In today’s economy, a high income history does not mean that high income will continue. Bonuses or commissions may not continue to occur. When jobs are lost, new employment may not bring the same compensation. A history of high previous income is not an isolated situation. In the Stowell case, the court attempted to create a procedure where Mr. Stowell would pay child support on future commissions only when earned, on a percentage of future variable earnings. The Supreme Court reversed, and the ruling makes this difficult if not impossible to use this approach.
The Supreme Court made it clear that such a percentage of variable income procedure could be used only as a deviation. It also appears that such a procedure would be extremely difficult to do in an acceptable fashion. The court states more than once that the child support calculation must be a "sum certain". It is obviously difficult to reduce future commissions to a deviation in a sum certain before they ever occur.
Mr. Stowell had a history of earning commissions in his previous jobs. The appellate ruling appears to require that variable income such as his must therefore be averaged, to come up with a stated amount of income for the child support calculation.
The opinion is confusing as to whether such a percentage computation of child support could ever be accepted, even as a deviation. Even though the court says, in one part on the opinion, it could accept a percentage computation of child support as a deviation, in another it says such an approach “flies in the face” of the sum certain requirement (Emphasis supplied).
The court didn't say that such a percentage calculation is never acceptable. But, the dissent pointed out the impracticality of this approach. The dissent pointed out: "Even if the award at issue had been referenced somehow as a deviation on Schedule E, the majority sheds no light on how a deviation that is undetermined as to amount and timing could possibly be incorporated into the mathematical calculation of Stowell's monthly recurring child support obligation. This is, of course, because it cannot be done." (Emphasis supplied).
The majority opinion effectively closed the door on using a percentage calculation for future child support, even as a deviation, because the paying party would have a different child support amount every year. The court, in rejecting the trial court’s percentage approach, states “it is highly likely that Stowell will have a different child support obligation every year, which flies in the face of the requirement that the presumptive child support amount consist of "a sum certain" that may only be varied if the trial court specifically finds deviations that are supported by written findings of fact. OCGA § 19-6-15 (b) (7), (8)." (Emphasis supplied).
As the dissent says, it would be impossible to do any percentage calculation of child support on variable future income and end up with the same sum certain of support in each future year. Trial judges would likely be hesitant to attempt to craft one, in view of this opinion.