Are Bonuses Included in Income When Calculating Alimony or Child Support?
In Michigan, child support is calculated by use of a formula that takes into account each parent's income; the number of overnights each child has with each parent, health care premiums paid by a parent for the child, and child care expenses until August after a child's twelfth (12th) birthday. Alimony, also known as spousal support, should be determined by considering fourteen (14) different factors. The factors are overlapping so that income and ability to earn are referenced or are relevant to several of those factors. Currently, most divorce lawyers, mediators and even the courts (due to a relatively recent change in the case law) use prognosticator programs to help determine at least a starting point for alimony and income is a primary factor in those formulas.
In any case, either through negotiation, mediation or trial, the determination of what constitutes the proper income for each party is very important and may have a significant effect on the ultimate award of support. One common question in divorce cases is whether a parent's bonus should be included in income. Bonuses by their very nature vary from year-to-year and with the automotive industry may not be given at all for several years in a row due to factors outside the control of the individual faced with potential support. Therefore, many believe that it is not fair to include bonus income in these circumstances.
To determine what should be included in income, most well-versed divorce lawyers will start by looking at the Michigan Child Support Formula Manual (for alimony as well because it is analogous to child support) which is promulgated by the State Legislature. According to the manual, for better or worse, the legislature has determined that bonuses should be included in income for these purposes. The manual states that when considering bonus income that varies yearly or monthly, the court should use a three-year average of the total income including bonuses to determine the proper income to use for alimony or child support. However, the manual also states in another section that one reason to request that a court deviate from the formula is where a parent receives bonus income in varying amounts or at irregular intervals. This means there may be a good argument in such a situation that the bonus, when granted, is such an aberration that it should not be included in income.
Determining child support and alimony in divorce can be more complicated than one might originally believe given the very different definitions of income and variables that are involved. If one does not have an attorney that practices only in the area of family law, then most often he or she will not be able to take advantage of these nuances. If you have any questions regarding divorce, separation, alimony or child support, please do not hesitate to contact my assistant, Cathy, at (248) 608-4132 or [email protected] to schedule an appointment.