Child Support in Minnesota, Part 2: Determining Income and Other Necessary Information

Sep 12, 2008

Now that you understand the basic concepts of Minnesota’s new child support law, you need to know what information is necessary to calculate support.  A tricky part to this is figuring out income.  You need to know each parties’ gross (before taxes) monthly income.  The new law also expects that (nearly) all parents can work full-time and allows the imputation of potential income for parents who are not working full-time.  There are also different “discounts” for a parent’s income based on supporting other children or paying spousal maintenance.

Gross Income

Under the statute, gross income is defined by section 518A.29(a) as:  “any form of periodic payment to an individual, including, but not limited to, salaries, wages, commissions, self-employment income under section 518A.30, workers’ compensation, unemployment benefits, annuity payments, military and naval retirement, pension and disability payments, spousal maintenance received under a previous order or the current proceeding, Social Security or veterans benefits provided for a joint child under section 518A.31, and potential income under section 518A.32.”

Potential Income (also known as imputed income)

The law now clearly states in section 518A.32 that: “If a parent is voluntarily unemployed, underemployed, or employed on a less than full-time basis, or there is no direct evidence of any income, child support must be calculated based on a determination of potential income. For purposes of this determination, it is rebuttably presumed that a parent can be gainfully employed on a full-time basis. As used in this section, “full time” means 40 hours of work in a week except in those industries, trades, or professions in which most employers, due to custom, practice, or agreement, use a normal work week of more or less than 40 hours in a week.”

Even if a parent does not work full-time, a full-time income will be used for purposes of calculating child support.  And if a parent is underemployed (really is a highly skilled surgeon who used to make $500,000 a year, but is now working for minimum wage), child support will be calculated based on what that parent could be making.  A parent will not be considered unemployed or underemployed if it is temporary and will ultimately lead to increased income (i.e. going to school), is a “bona fide career change that outweighs the adverse effect of that parent’s diminished income on the child”, or the parent is incapacitated or incarcerated.  Potential income will not be used if a parent is the recipient of a temporary assistance to needy family cash grant (TANF/MFIP).

Potential income can be determined using one of three methods:

(1) the parent’s probable earnings level based on employment potential, recent work history, and occupational qualifications in light of prevailing job opportunities and earnings levels in the community;

(2) if a parent is receiving unemployment compensation or workers’ compensation, that
parent’s income may be calculated using the actual amount of the unemployment compensation or workers’ compensation benefit received; or

(3) the amount of income a parent could earn working full time at 150 percent of the current federal or state minimum wage, whichever is higher.

Nonjoint Children

When calculating child support, you also need to know the number of nonjoint children living with a parent and the amount of child support that is court-ordered to be paid (not received) for nonjoint children.  A nonjoint child is a legal child of one of the parties, but not both of the parties.  A stepchild is not considered a nonjoint child.  When determining the monthly gross income available for child support, a parent receives a credit for nonjoint children living in their home (for a maximum of two nonjoint children) or for court ordered child support paid for a nonjoint child.

Spousal Maintenance

The IRS considers spousal maintenance deductible from the income of the party who pays it and included in the income of the party who receives.  In calculating child support, spousal maintenance that is paid (to a former spouse or in the current action) is deducted from that party’s income.  Spousal maintenance that is received is included in that party’s income.  And this means spousal maintenance must be figured out before a final computation of child support can be done.

Health Insurance Costs

To figure out medical support, you will need to know what the health insurance costs are.  But this is not as simple as looking at a paystub to see what is taken out.  You need to know how much it costs just to cover the children.  Some plans are $X for employee and $Y for employee + family, some are $X for employee, $Z for employee + spouse and family, $Y for employee + family, and others are $X for employee, $Z for employee + 1, $Y for employee +2, and so on.  Get the benefits information from the employee and find out all of these costs.  Then take the cost to cover the kids and subtract the costs to cover the employee ($Y – $X), this is the cost of health insurance for the children and this is the cost you will need to calculate medical support.