Determining Gross Income for Child Support Purposes

• Jurisdiction: Colorado,United States
• Citation: Vol. 32 No. 4 Pg. 65
• Pages: 65
• Publication year: 2003

32 Colo.Law. 65 Colorado Lawyer 2003.

2003, May, Pg. 65. Determining Gross Income for Child Support Purposes

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65

Vol. 32, No. 4, Pg. 65

The Colorado Lawyer
May 2003
Vol. 32, No. 5 [Page 65]

Specialty Law Columns
Family Law Newsletter
Determining Gross Income for Child Support Purposes
by Denise A. Cook

This column is sponsored by the CBA Family Law Section to provide information to family law practitioners. Articles are intended to focus on practice tips and discussions of current issues within the realm of family law. New column authors are welcomed

Column Editors

Gretchen Aultman, Denver, of Burns, Wall, Smith &amp Mueller, P.C. - (303) 830-7000, gaultman@bwsm.com; Marie Avery Moses, Lone Tree, an associate at Gutterman, Griffiths & Powell, P.C. - (303) 858-8090, marmoses@msn.com

About The Author:

This month's article was written by Denise A. Cook, Lone Tree, an associate with Heckenbach Carlton, LLP - (303) 858-8000, dcook@familylawcolorado.com.

This article provides a summary of statutory provisions and case law governing the types of income that should be included when determining gross income for the purpose of calculating child support.

Under Colorado law, both parents have a duty to provide support for their children.1 In a dissolution of marriage action, each parent's respective obligation regarding the support of the children is determined by using Colorado's child support guidelines ("Guidelines"). The Guidelines are set forth by statute under the Uniform Dissolution of Marriage Act ("UDMA").2

Family law attorneys often find that clients do not understand or are reluctant to accept the rules governing sources of income available for calculating child support. This article provides an overview of the Guidelines and summarizes case law in that area. The article also reviews issues that may create confusion regarding the determination of income for child support purposes.

Overview of Colorado Child Support Guidelines

Colorado's Guidelines are modeled after the Income Shares Model,3 which was developed in response to concerns that lowering child support amounts would result in a severely decreased standard of living for custodial parents and their children.4 The Income Shares Model is based on the premise that a certain percentage of a two-parent family's income is spent on their children. According to the Income Shares Model, children whose parents are no longer married should receive the same amount of support they would have if their parents had stayed together.5

The Guidelines provide a specific formula for determination of child support. As a result, most child support disputes center on the determination of a parent's income, which is a significant part of that formula.

The Guidelines calculate child support based on the combined adjusted gross incomes of the parties. Determining "gross income" is a source of confusion, controversy, and litigation for family law practitioners. "Gross income" refers to: (1) the actual income a parent would earn if he or she were employed to "full capacity"; or (2) potential income, if a parent is unemployed or underemployed.6 This article focuses on the determination of gross income for fully employed parents and provides an overview of recent decisions defining gross income within the meaning of the statute.

Definition of Gross Income

Under Colorado law, gross income for child support purposes includes a laundry list of sources of income. It specifically provides that gross income includes, but is not limited to, those items contained in CRS § 14-10-115(7)(a)(I)(A). Income sources enumerated by the statute include: salaries; payments received for work as an independent contractor; benefits from Social Security, workers' compensation, and unemployment insurance; gifts; monetary prizes; dividends; interest; rents; and royalties.7

In fact, there are only a few narrow exceptions to the definition of gross income - notably, funds received from public assistance and voluntary overtime pay. The inclusion of any source of income is not limited to those enumerated in the statute.8 Income from employment is not the only income that must be included in child support calculations.9 Thus, family law attorneys often must spend significant time educating their clients that sources of income other than salaries are to be added to the parent's income for purposes of calculating child support.

Tax Issues

Calculation of child support pursuant to the Guidelines requires use of pre-tax income. For child support purposes, gross income does not take into account any deductions of federal and state income taxes or FICA taxes.10

The Colorado Court of Appeals held in In re Marriage of Stress11 that the husband's gross income included amounts paid to him by his employer to compensate him for the cost of living in Canada. In addition to his salary, the father in Stress received a foreign service premium and a commodities and service allowance to offset the cost of living in a foreign country. His employer also paid him a lump sum each year that was simultaneously deducted from his paycheck for payment of...