Potential income

If a parent is voluntarily unemployed, underemployed, employed less than full-time, or there is no direct evidence of income, the court must calculate child support based on potential income of that parent. The court will determine potential income by imputing income based on the parent’s probable earnings based on employment potential, recent work history, and occupational qualifications; or if the parent is receiving unemployment or workers’ compensation, by using that amount as the individual’s income; or by imputing income based on the full-time wages the parent could earn at 150 percent of the current federal or state minimum wage, whichever is higher. If a parent is physically or mentally incapacitated, or is incarcerated other than for nonpayment of support, the parent is not considered voluntarily unemployed, underemployed, or employed on a less than full-time basis. Minn. Stat. § 518A.32.

Independent contractors; self-employed

Income from self-employment or operation of a business means gross receipts minus ordinary and necessary expenses. “Ordinary and necessary expenses” for child support purposes does not include expenses, such as accelerated depreciation expenses or investment tax credits allowed under the Internal Revenue Code, or expenses the court determines are inappropriate or excessive. The person seeking to deduct an expense, including depreciation, has the burden to prove the expense is ordinary and necessary. Minn. Stat. § 518A. 30.

Expense reimbursements; in-kind payments

If received in the course of employment, self- employment, or operation of a business, expense reimbursements and in-kind payments are counted as income if they reduce living expenses. Minn. Stat. § 518A.29.

Social Security or veterans’ benefits

If a child receives Social Security benefits, veterans’ benefits, or veterans dependents’ education assistance due to the eligibility of a parent, the amount will be included in the gross income of the parent on whose eligibility the benefits are based. If the obligee, as representative payee for the child, receives the benefits for the child, then the amount of benefit will be subtracted from the obligor’s net child support obligation. Minn. Stat. § 518A.31.

Commissions; bonuses; lump-sum payments

Commissions and bonuses are considered when determining gross income. Lump-sum payments may be withheld from an obligor to pay past due support or to pay future support if there is a history of willful nonpayment. Minn. Stat. §§ 518A.29, para. (a); 518A.53, subd. 11.

Seasonal employment

Obligors who are seasonally employed generally are required to make equal monthly payments throughout the year. Courts do have discretion to construct support orders to reflect fluctuations in income. But because the expenses of raising a child are not seasonal, courts generally require equal monthly payments, and the obligor must budget accordingly. Minn. Stat. § 518A.38, subd. 2.

Overtime

Generally, it is assumed that obligors are not required to work overtime. However, if an obligor has a history of working overtime, the court may conclude that overtime is a normal, regular source of income for the obligor. In that case, the court can consider overtime earnings when setting child support. Similarly, if the overtime is a condition of employment, it is considered as income. Salaried employees may not deduct “overtime” for hours worked in excess of a 40-hour week. A court may also determine whether an obligor’s compensation structure has been changed to manipulate a support obligation and may modify, or not modify, child support accordingly. Regardless of whether overtime is voluntary and regular or not, it may be withheld to pay existing arrearages. Minn. Stat. §§ 518A.29; 518A.39, subd. 2, para. (d)(2).

Joint physical custody

When parenting time and parental incomes for determining child support are equal, no basic support is owed unless the court determines the expenses for the child are not shared equally. When parenting time is equal, but parental incomes for determining child support are not equal, the parent with the higher income will pay child support. Minn. Stat. § 518A.36, subd. 3.

MFIP participants

When an obligee is a participant in the Minnesota Family Investment Program (MFIP), the state must distribute or pass through to the obligee all current child support that the obligee has assigned to the state. The state then reduces the obligee’s MFIP grant by the total amount of the child support payment. Minn. Stat. § 256.741, subd. 15. For further information on MFIP, see the House Research report Minnesota Family Assistance: A Guide to Public Programs Providing Assistance to Minnesota Families, December 2009.

This material and the material in the following posts has been copied from Minnesota’s Child Support Laws, An Overview, drafted by the Minnesota House of Representatives Research Department’s legislative analyst, Lrnn Aves.

This post is part of a series of posts on Calculating Child Support in Minnesota.