Articles Posted in Child Support

Under Illinois law, are expenses reimbursed by an employer considered “income” for purposes of calculating child support?

 

For starters, Illinois requires a noncustodial parent to pay guideline child support based upon a percentage of his “net income.” Under the statute, “net income” means “the total of all income from all sources,” minus certain deductions defined by law. But, is money received as a reimbursement really income? From an employee’s perspective, it would seem odd to think so; because he is only being reimbursed for money he actually spent out of his own pocket. Thus, he isn’t really getting ahead financially on the deal. Rather, he is simply breaking even.

 

The Second District Appellate Court recently addressed this issue in the case of Marriage of Shores. In that case, the noncustodial father appealed the trial court’s award of an increase in child support order based upon his earned two reimbursement payments received through his employer, among other issues. In short, the appellate court held that the reimbursements that he received were considered income for child support calculation purposes. But why?

 

In Shores, the father received two fairly large relocation reimbursements from his employer, because his office was 60 mile from home. He obtained a second residence closer to the office. The employer paid his “duplicate housing expenses,” such as the mortgage, interest, and taxes for the home which was closer to the office.

 

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[UPDATE – The passage of the revised Illinois Marriage and Dissolution of Marriage Act renders the legal analysis in this post inapplicable to cases pending after January 1, 2016.  The revised 750 ILCS 5/505(h) explicitly authorizes the courts to deduct student loan payments in calculating a child support obligor’s net income.]

 

Many parents today face the financial reality of paying child support. Many of those same parents also face the reality of repaying their own, sizeable, student loan debt. In Illinois, child support is set according to statutory guidelines, which set support based upon a percentage of the supporting parent’s net income. By law, is a noncustodial parent allowed to deduct student loan payments in calculating his or her net income for child support purposes?

 

The answer is maybe, sometimes. For child support purposes, the term “net income” is defined by statute. It is calculated by taking all of the supporting parent’s income from all sources and subtracting particularly specified deductions, such as taxes, union dues, health insurance premiums, and the like. The statute also allows for the deduction of:

 

“Expenditures for repayment of debts that represent reasonable and necessary expenses for the production of income, medical expenditures necessary to preserve life or health, reasonable expenditures for the benefit of the child and the other parent, exclusive of gifts. The court shall reduce net income in determining the minimum amount of support to be ordered only for the period that such payments are due and shall enter an order containing provisions for its self-executing modification upon termination of such payment period.”

 

So, with the media declaring that America has a $1.2 trillion college debt “crisis,” will custodial parents soon face a corresponding reduction in child support crisis? Will a noncustodial parent who racked up massive student debt in obtaining a professional degree necessarily be able to deduct that student loan payment from his income when calculating his child support obligation? Not necessarily – but possibly some of it.

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Currently, Illinois uses a “percentage of income” formula to calculate a parent’s child support obligation to the custodial parent. This formula calculates child support by multiplying the noncustodial parent’s net income by a certain percentage to determine that parent’s guideline child support obligation. The guideline percentage varies depending on the number of children between the parties. For one child, guideline support is 20% of the noncustodial parent’s net income. For two children, it’s 28%. For three, it’s 32%, and so on. This way of calculating a noncustodial parent’s child support obligation has been in effect since the 1980’s and some argue it is due for makeover.

 

For one, opponents of Illinois’ current calculation method argue that it fails to automatically take into account the income of the custodial parent. Rather, in Illinois, the court will determine strictly by looking at the noncustodial parent’s income in the overwhelming majority of cases. In order for a court to consider the custodial parent’s income, the noncustodial parent would have to specifically request that the court deviate from statutory guidelines. Deviation often requires negotiation and litigation. In the end, the court will determine how much to deviate from guidelines based upon what the judge believes to be fair. As a result, outcomes may vary from case to case and courtroom to courtroom.

 

Take, for example, the recently-decided case of the Marriage of Turk. In that case, the custodial father made over $150,000 per year, while the noncustodial mother earned less than $10,000 per year. As a result, the court actually ordered the custodial parent to pay child support to the noncustodial parent, so that she could provide for the children when they were visiting with her. While the Supreme Court eventually decided that the current child support law does permit such an outcome, the parties had to litigate the case all the way up to the Supreme Court over a period of several years to obtain that result. Worse, the Supreme Court then remanded the case for further evidentiary hearings to determine what each parent’s child support obligation should be. Most people simply can’t afford that sort of court battle, financially or emotionally.

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Yes, you read that correctly. In Illinois, under certain circumstances, a noncustodial parent may be entitled to receive child support from the custodial parent.

 

In a divorce or parentage case, a court may either grant joint custody of the children to both parents, or grant sole custody to one parent. The term “custody” relates to the authority to make major life decisions for the children, such as education, religion, health care, and the like. Thus, even where there is joint custody, the court must still designate which parent will be the primary residential parent, and set a visitation or parenting time schedule for the other parent to have the minor children. Even in situations where the parents essentially share time equally with the children at a nearly 50-50 split, one parent will typically be deemed the primary residential parent. The residential parent is often called the physical custodian of the children. In order to make this blog readable, we will simply refer to the primary residential parent as the custodial parent.

 

In the overwhelming majority of cases, the custodial parent is entitled to child support from the noncustodial parent. Child support is governed by Section 5/505 of the Illinois Marriage and Dissolution of Marriage Act, which sets forth statutory guidelines for how much child support is to be paid out of the payor’s net income. The statute sets child support based upon the number of minor children involved. For one child, the payor is to pay 20 percent of his or her net income; for two children, 28 percent; for three children, 32 percent; for four children, 40 percent; for five children, 45 percent; for six or more children, 50 percent. See 750 ILCS 5/505(a)(1).

 

However, a custodial parent is not always entitled to child support from the noncustodial parent. In crafting the statute, the Illinois Legislature did not specify that only noncustodial parents are responsible for paying child support (as is the case in some states). In fact, the statute gives the courts discretion to “order either or both parents owing a duty of support to a child of the marriage to pay an amount reasonable and necessary for the support of the child” (Emphasis added) 750 ILCS 5/505(a).

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Income withholding notices issued to employers are the most common way child support orders are enforced. When everything works as it should, employers dutifully obey such notices, withhold child support from the employee’s pay, and send payment off to the Illinois State Disbursement Unit (the “SDU”). The SDU then forwards the money on to the custodial parent, and keeps records in case there is ever a dispute over how much was paid and when. In places like DuPage County, Illinois, where judges place great emphasis on enforcement of child support orders, the Clerk of the Circuit Court automatically issues an income withholding notice to the non-custodial parent’s employer any time a child support order is entered in a case (provided the proper form is used).

 

But what happens if an employer fails to obey the income withholding notice? What happens if the employer never withholds the money for child support?

 

The law on point, called the Income Withholding for Support Act (the “Act”), places a duty on an employer who has been served with a notice of withholding to pay to the SDU. 750 ILCS 28/1 et seq. Further, the Act provides a severe penalty of $100 each day that a payor knowingly fails to pay ordered amounts to the State Disbursement Unit. 750 ILCS 28/35(a). As such, the Act demands strict compliance. The $100 per day penalties accumulate and run concurrently, meaning that each pay period in which the employer fails to comply is subject to a separate $100 per day penalty. For example, if an employer disobeys a withholding notice over the course of ten pay periods, the fines would accumulate at a rate of $1,000 per day. And, in case you were wondering, the penalties are to be paid to the custodial parent.

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Normally, a non-custodial parent’s child support obligation is based upon a percentage of his net income, depending on how many minor children there are (for purposes of this blog, I will be sexist and assume the party paying child support is the father rather than writing “his or her” and “he or she” every time). The statutory guideline child support percentages are laid out clearly in 750 ILCS 5/505. However, what happens if he becomes disabled, and collects social security disability insurance (“SSDI”)? Does he still have to pay? Can his benefits be garnished? What if he owes arrearages which arose prior to receiving SSDI?
As long as a disabled person receiving SSDI has minor children, Social Security will pay what is called a dependent disability allowance. In short, it is an extra benefit each month which is intended to provide for the dependent children. In 1993, the Illinois Supreme Court decided the case of Marriage of Henry, 156 Ill.2d 541, 542, 622 N.E.2d 803 (1993), which set forth the general rule: Payment of a social security dependent disability allowance fulfills a father’s child support obligation for those months during which the allowance was paid.

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