IMPUTING STEP-PARENT’S INCOME FOR CHILD SUPPORT
In Faux v. Ferry, http://www.in.gov/judiciary/opinions/pdf/06031501jgb.pdf, the Father claimed the court should have imputed Mother’s new husband’s income for the child support calculation. This issue is covered by Indiana Child Support Guidelines Commentary 3A(d). Mother had a substantial drop in income since the parties’ divorce from nearly $3000 per week to just under $300 per week while at the same time Father’s income had tripled. The trial court found that the parties’ household incomes including their new spouses, “…enjoy significant economic advantages…” The trial court did not impute income from either new spouse. The Court of Appeals upheld the trial court’s decision finding that the standard of review is abuse of discretion and the trial court did not abuse its discretion. The Court of Appeals held that while the trial court could have imputed the step-parent income, it was not required to do so. This is not a change in the way most have practiced.
HEALTH INSURANCE PAID BY STEP-PARENT
The evidence was that Mother’s new husband provided the health insurance for the parties’ minor child and the trial court gave Mother credit for the premium on the child support worksheet. The Court of Appeals reversed stating it was an abuse of discretion to treat the Mother and her new spouse as separate financial entities for income but credit Mother for the health insurance paid by her husband. The court reversed that issue with instructions to calculate the support without the health insurance credit. Most lawyers and judges have previously given the credit without imputing the income by the step-parent. This will now be a new matter of contention in many child support matters.
SELF-EMPLOYMENT TAX DEDUCTION
Another issue that Father raised was the court did not reduce his income for the child support calculation by half of the self-employment tax (as allowed by the guidelines) he paid as he was self-employed. The Court of Appeals found that the Father invited the error and, therefore, left the income amount stand as Father had submitted a worksheet stating his income without the deduction. It is essential that lawyers understand how to read a w-2 and a tax return before calculating support.
Submitted by Richard A. Mann, Richard A. Mann, P.C. attorneys at law