Lesser Known Child Support Formula Provisions

With tax season upon us, money remains at the forefront of many people’s minds and it seemed like an opportune time to touch on some of the lesser known provisions in the child support formula. Below are some provisions from the 2021 Michigan Child Support Formula Manual that clients are most surprised by.

When the court is calculating income, it can include “perks” that the parent receives through his or her job, as long as the parent did not pay for it, it reduces personal expenses, is received regularly and/or is significantly valuable.  This can include a company car that the employee can use personally, mileage reimbursement, housing monies and food.  However, it does not include tuition reimbursement, HSA contributions or uniforms.

If your long-lost relative left you an inheritance, the property or principal from the inheritance (or one and done present) is not usually considered income, but the interest and potential interest earned on it can be.

Similarly, if you have a really nice family member or friend who likes to bestow gifts upon you in the form of cold, hard cash, food, shelter or a car, the value of those items may be considered income.  If great aunt Martha lets you live in her semi-finished walk-out basement rent free, that could come into play when determining child support. To be considered, these items also should reduce your personal expenses or “[replace] or [supplement] employment income.” However, gifts from a current spouse do not apply (so keep buying your wife jewelry guys).

The court can include the cost that a parent’s spouse pays for the children in the case to be covered on the spouse’s health insurance, with the manual allowing “amounts paid by the parent’s household as the parent’s premiums paid to insure the children.” If the court orders that the insurance be covered in this way, the parent is “required to purchase coverage immediately should the alternative coverage stop” (for example, if the new spouse lost his or her job and therefore the insurance coverage, or if they later divorced and the children could no longer be covered). If the spouse provides insurance for the parent in the case, that parent does not receive the self-coverage credit.

Money that is received from either parent or the child that is Supplemental Security Income (SSI) is not includable in the formula as income, nor can it be used to offset the child support amount like Social Security Disability (SSD) income can. SSI, along with TANF funds, food stamps and the Federal earned income credit, are considered forms of “means tested income” and are not used in the formula. Any monies received by a parent for a child that is not the child of the case is not considered (for example, child support for an additional child by another parent, SSD benefits for children not of the case).

The formula manual and its supplement are large and complicated, and things are often overlooked, so hopefully this eliminates some of the confusion. Surprises are only fun when they sparkle.

For reference, the formula manual provisions detailed in this article are the following sections: 2.01D(1) & (2); 2.01L; 2.04A; 2.05A, B & C; 2.07F; 3.05B(3) & 3.05C(c).

Don't quit your job to avoid child support

Thanks in part to the pandemic and employment changes, child support is a hot topic in the courts right now.  When I came back to work after the 2020 shutdown, I was overwhelmed by the number of new pleadings requesting a change in child support, and it really hasn’t slowed down.  Businesses are short staffed and hiring signs are everywhere – I even got an application in my kids’ Happy Meals the other day (due to child labor laws, they won’t be able to apply, and will continue to live rent free).

Along with employment changes comes the misconception from parties that their income will be put at zero for child support calculations if they aren’t working.  While this can be true in some cases, many people have the ability to work and the Michigan Child Support Formula (MCSF) Manual takes this into account. Imputation is used in many cases where someone is unemployed, but not prevented from working. 

The court can use unemployment benefits as a person’s source of income for purposes of calculating child support. However, if those have run out, and the individual is still unemployed, we can assign them potential income – income that the courts believe he or she could be earning.  The MCSF sets forth factors to be considered when imputing an individual, and  imputing a second job when a person already works 35+ hours a week is inappropriate, as well as imputing overtime. Imputation can also be used when a person is “underemployed,” or voluntarily reduces his or her income.  If a person quits his or her job to avoid paying child support, the court can (and likely will) assign them potential income.

Among other factors, the formula considers the imputed person’s education, disabilities, access to transportation and criminal history. Even if there are some concerns with the factors, it doesn’t completely rule out assigning potential income – it will just be adjusted and take into account any issues the person has. If income is imputed, potential daycare costs (for the child in the case) may be included in the calculations.

Since many employers are now paying over minimum wage, with options for same day pay and bonuses, it’s becoming more difficult for individuals to argue they can’t find employment.  While imputation isn’t perfect, it is helpful in ensuring child support is properly charging, and motivating individuals to gain employment or keep their current job.