What Is Considered Gross Income for Arizona Child Support in AZ
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You may be asking what is considered gross income for child support in Arizona. Child support in Arizona can be a complicated issue for both the parent paying child support, as well as the parent receiving child support.
The problems sometimes associated with determining the correct amount of child support can be more complex when the parents disagree with what sources of funds constitute gross income to be included in the child support calculation.
Income from employment is straightforward as constituting income to a parent.
However, is income received from an inheritance, funds are withdrawn from a retirement account, or funds removed from an investment account income to be included in the gross income of one of the parents?
Should the court only consider the investment return on those investments or can a court consider both investment return and principal withdrawals as income?
Using Gross Income From Investments for Child Support in Arizona
In the first case of its kind in Arizona, the Arizona Court of Appeals addressed these issues in the Milinovich vs. Womak case.
Monica gave birth to Anthony’s child.
She subsequently filed a court case to declare Anthony as the child’s father and to establish parenting time and child support orders.
At the time of the hearing, Anthony was nearing the end of his career as a professional athlete and had reached an agreement with his employer to defer a majority of his earnings to a deferred compensation arrangement consisting of approximately $3,300,000.00.
Anthony took those funds and created two separate investment accounts.
One such investment account was funded with $800,000.00 and was designed for the sole purpose of paying Anthony $5,000.00 per month for expenses until it was exhausted at which time the second investment account was set up as an annuity to enable Anthony to begin then drawing money from that account when the first account was exhausted.
Anthony’s actual living expenses, however, turned out to be more around $40,000.00 per month.
Anthony, therefore, withdrew the $5,000.00 interest earned on the principal, as well as an additional $35,000.00 from the principal investment in the account every month.
Anthony was making approximately $166,000.00 a year in gross income when child support was first calculated.
Anthony filed a Petition to Modify Child Support on the basis that his annual income had dropped from $166,000.00 to $60,000.00, which was the $5,000.00 per month he earned on the interest in the first investment account.
The issue for both the trial court and the Arizona court of appeals was whether gross income in Arizona child support calculations should only be based upon, in this case, the investment return on Anthony’s asset (i.e., investment account).
Or, whether Anthony’s withdrawal of principal from that account, which was Anthony’s sole and separate property, could also be included as “income” for the purpose of calculating child support.
Determining if Withdrawal of Investment Principle is Income For Child Support
The Arizona Court of Appeals began its’ analysis by pointing out the Arizona Child Support Guidelines were created to establish child support that meets the needs of children and is in an amount the parents can pay and ensure people in similar financial situations are treated similarly.
The Arizona Court of Appeals found that the withdrawal of principal from an investment account is not addressed in the guidelines and has not been previously ruled upon by the Arizona Court of Appeals.
The Arizona Court of Appeals indicated the purpose of the Arizona Child Support Guidelines was also to determine how much money would be spent on a child if the parents were living together.
The appellate court referred to a prior Arizona Court of Appeals ruling in Cummings v. Cummings.
The court in the Cummings case held the guidelines do not explicitly limit what the court may consider as income for the purpose of calculating child support and that income for child support purposes is not necessarily the same as income for income tax purposes.
Anthony argued his withdrawal of principal from his investment account does not constitute income for income tax purposes and should not be included as income for child support purposes.
The court of appeals rejected Anthony’s argument; albeit very cautiously.
The appellate court reasoned that Anthony’s withdrawal of principal from his investment account was his planned retirement strategy and, further, that the child would have enjoyed the benefit of those withdrawals had the parents been living together.
The appellate court also reasoned that had Anthony’s employer paid him in equal monthly installments, instead of deferring the $3,300,000.00 into one lump sum payment, all of those monthly payments would constitute income to calculate child support.
The justices reasoned that the child should not be deprived of a higher child support amount just because Anthony structured his compensation in a way that led to a lump sum payment to be invested and then used by Anthony to support himself.
Anthony argued an Illinois Supreme Court decision case of In Re the Marriage of McGrath that held a withdrawal from a savings account should not be considered income to calculate child support.
The Arizona Court of Appeals stated the ruling, in that case, was correct but distinguished it from the facts present in Anthony’s case by ruling a withdrawal from a savings account is significantly different than setting up an investment strategy that provides a continual source of money to support oneself.
The court of appeals held that the analysis as to whether the sale of an asset, withdrawals from investment accounts, or monies received by inheritance may be used to calculate child support needs to be decided on a case-by-case basis with the primary focus being upon whether the transactions are being relied upon to pay living expenses.
Funds Received from a Sale of Assets is Generally Not Considered Income for Child Support
The justices cited the Jenkins v. Jenkins case and the Burnette v. Bender, both Arizona cases, as examples of when monies received from the sale of the property should not be included as income when calculating child support in Arizona.
In those cases, assets were either sold and then used to purchase other assets or were reinvested. In other words, the owner of such property was not using the money to support themselves.
The takeaway from this case is that the trial court must look beyond what the Internal Revenue Service defines as income and look at any source of funds used to support a person as “gross income” when calculating child support in Arizona.
Arizona Child Support Attorneys
If you have questions about what is considered gross income for child support in Arizona, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona child support and family law attorneys have over 100 years of combined experience successfully representing clients in child support and family law cases.
Our family law firm has earned numerous awards such as US News and World Reports Best Arizona Family Law Firm, US News and World Report Best Divorce Attorneys, “Best of the Valley” by Arizona Foothills readers, and “Best Arizona Divorce Law Firms” by North Scottsdale Magazine.
Call us today at (480)305-8300 or reach out to us through our appointment scheduling form to schedule your personalized consultation and turn your child support or family law case around today.
Other Frequently Asked Questions About Income to Calculate Child Support in Arizona:
Is child support based on income in Arizona?
Child support is calculated, in part, from the parents’ incomes. However, other factors play a role in child support in Arizona including how much time the parent spends with their kids, the cost of health insurance, the cost of day care, and any other extraordinary expenses the child require.
How does Arizona figure out child support?
Arizona determines child support using the income shares model of the Arizona Child Support Guidelines.
Are bonuses included in child support in Arizona?
Yes, bonuses are included in income to calculate child support in Arizona even if those bonuses are not guaranteed. Most judges will tell a parent whose bonuses were included to calculate child support that they may, in the future, file to modify child support if those bonuses are not earned or decrease in the future.
Does child support go down if a parent, either Father or Mother, have another child?
Child support may go down if a parent has another baby because an amount is deducted from that parent’s income to calculate child support. But, understand there are other factors that impact child support which could result in your child support increasing even though you had another baby.
Other Articles About Child Support in Arizona
- ARIZONA CHILD SUPPORT LAWS
- ARIZONA UNIFORM INTERSTATE FAMILY SUPPORT ACT (UIFSA) STATUTES
- ATTRIBUTING INCOME FOR CHILD SUPPORT IN ARIZONA
- DIVIDING UNCOVERED MEDICAL EXPENSES IN AN ARIZONA CHILD SUPPORT CASE
- THE RELATIONSHIP BETWEEN CHILD SUPPORT AND DEBTS IN ARIZONA
- THE DEFINITIVE GUIDE TO CHILD SUPPORT IN ARIZONA
- DUE PROCESS REQUIRES NOTICE OF A CHILD SUPPORT MODIFICATION
- CHILD SUPPORT DEVIATION IN ARIZONA
- IS AN INCREASE IN INCOME CAUSE TO MODIFY CHILD SUPPORT IN ARIZONA
- CHILD SUPPORT AND ASSETS IN ARIZONA
- EFFECT OF EMPLOYMENT BENEFITS ON CHILD SUPPORT IN ARIZONA
- EFFECT OF STOCK OPTIONS ON CHILD SUPPORT IN ARIZONA
- MODIFYING CHILD SUPPORT FROM ANOTHER STATE IN ARIZONA
- CHILD SUPPORT MUST BE MODIFIED WHENEVER CHILD CUSTODY ORDERS CHANGE IN ARIZONA
- REGISTERING A CHILD SUPPORT ORDER IN ARIZONA
- BURDEN OF PROOF FOR A DEVIATION IN CHILD SUPPORT IN ARIZONA
- REIMBURSEMENT FOR OVERPAID CHILD SUPPORT IN ARIZONA
- GIFTS AND FREE RENT MAY BE INCOME FOR CHILD SUPPORT PURPOSES
- COURT DISCRETION TO ADD RECURRING GIFTS AS INCOME FOR CHILD SUPPORT
- CHILD SUPPORT AND THE NARCISSIST PARENT
- INCLUDING INCOME FROM A SECOND JOB IN ARIZONA CHILD SUPPORT CALCULATIONS
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- CHILD SUPPORT CANNOT BE A PERCENTAGE OF A PARENT’S INCOME IN ARIZONA
- WHAT IS A WAGE ASSIGNMENT IN ARIZONA
- THE AGE WHEN CHILD SUPPORT ENDS IN ARIZONA
- SSDI PAYMENTS OFFSET MEDICAL EXPENSES FOR A CHILD IN ARIZONA
- MODIFYING CHILD SUPPORT WHEN NEITHER PARENT LIVES IN ARIZONA
- HOW TO MODIFY OR ENFORCE A CHILD SUPPORT ORDER ISSUED IN ANOTHER STATE
- HOW TO MAKE ARIZONA CHILD SUPPORT PAYMENTS
- HOW IS INCOME CALCULATED FOR CHILD SUPPORT IN ARIZONA
- HOW TO ENFORCE A CHILD SUPPORT ORDER IN ARIZONA
- CALCULATING A PARENT’S INCOME FOR CHILD SUPPORT IN ARIZONA
- ERRORS IN REGISTERING A CHILD SUPPORT ORDER FROM ANOTHER STATE IN ARIZONA
- DOMESTICATING A CHILD SUPPORT ORDER IN ARIZONA
- CHILD SUPPORT AND AN UNEMPLOYED PARENT IN ARIZONA
- WHAT DOCTORS SHOULD KNOW ABOUT CHILD SUPPORT IN ARIZONA
- CAN A NON-CUSTODIAL PARENT RECEIVE CHILDREN’S SOCIAL SECURITY BENEFITS IN ARIZONA
- START DATE FOR TEMPORARY SUPPORT IN ARIZONA
- EFFECT OF DENIAL OF VISITATION ON CHILD SUPPORT PAYMENTS IN ARIZONA
- ARIZONA CHILD SUPPORT FREQUENTLY ASKED QUESTIONS
- EFFECT OF ERRORS IN REGISTERING A CHILD SUPPORT ORDER FROM ANOTHER STATE IN ARIZONA
- WHEN YOU CAN MODIFY CHILD SUPPORT IN ARIZONA
- GIFT INCOME AND MODIFICATION OF CHILD SUPPORT IN ARIZONA
- WAIVER OF PAST CHILD SUPPORT BY AGREEMENT IN ARIZONA
- UPWARD DEVIATION IN CHILD SUPPORT IN ARIZONA
- MODIFYING A CHILD SUPPORT ORDER FROM ANOTHER COUNTRY
- OBJECTION TO CHILD SUPPORT ARREARS IN UIFSA DOMESTICATION IN ARIZONA
- CAN A SPOUSE’S INCOME BE CONSIDERED FOR CHILD SUPPORT IN ARIZONA
- LEGAL METHODS OF COLLECTING CHILD SUPPORT PAYMENTS IN ARIZONA
- ENFORCEMENT OF A FOREIGN COUNTRY CHILD SUPPORT ORDER IN ARIZONA
- DRIVERS LICENSE RESTRICTIONS FOR UNPAID CHILD SUPPORT IN ARIZONA
- CAN A LOAN BE INCLUDED AS INCOME FOR CHILD SUPPORT IN ARIZONA
- OVERPAYMENT OF CHILD SUPPORT IN ARIZONA
- PAST DUE SUPPORT PAYMENTS APPLY FIRST TO CHILD SUPPORT BEFORE ALIMONY
- CALCULATING CHILD SUPPORT WITH SPLIT CUSTODY OF CHILDREN IN ARIZONA
- EFFECT OF DELAY IN COLLECTING CHILD SUPPORT ARREARAGES IN ARIZONA
- RECOVERING CHILD SUPPORT NOT ORDERED IN A DIVORCE DECREE IN ARIZONA
- LEGAL OPTIONS FOR COLLECTING CHILD SUPPORT PAYMENTS IN ARIZONA
- ARIZONA COURT’S AUTHORITY TO HEAR CHILD SUPPORT ENFORCEMENT ACTIONS
- IMPACT OF WITHHOLDING A CHILD ON CHILD SUPPORT IN ARIZONA
- SISTER STATE’S RIGHT TO MODIFY ARIZONA CHILD SUPPORT RULING
- IS A CHILD SUPPORT ORDER VOID IF IT DOES NOT MENTION ARREARS IN ARIZONA
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- TIME LIMIT TO COLLECT CHILD SUPPORT ARREARAGES IN ARIZONA
- RETROACTIVE MODIFICATION OF A CHILD SUPPORT ORDER IN ARIZONA
- CONTEMPT OF COURT FOR UNPAID CHILD SUPPORT ARREARAGES IN ARIZONA
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