When should you seek modification of your child support?

A while back, I made a rare visit to the county jail to meet with a client.  Several years ago, he and his former wife reached an agreement in their divorce about custody, visitation and child support.  Things were pretty good – as far as divorces go.

Fast forward a few years…his dependable job and income went away with the recession along with his income.  He wasn’t able to keep his bills current and he quickly fell behind in his child support.  He kept in contact with his former wife and did other things to try to help when he couldn’t make a child support payment.  But he continued to fall further and further behind.

One day, his wife had enough and filed a Rule to Show Cause with the Family Court because my client had fallen nearly $20,000 behind in his support.

At the rule to show cause hearing the presiding judge found him to be in willful contempt of court, sentenced him to 90 days in county jail, ordered him to pay all of his former wife’s attorney fees, and before he could purge his jail sentence he would have had to pay all of the arrears and attorney fees.  To add insult to injury, even after finishing the jail sentence, he will still owe the arrears and his new support payments will include some extra amount to be applied to his child support arrears.

He never called a lawyer until he had been served with the contempt complaint.  Even when served with the complaint he failed to make an appointment to discuss the case and did not take a lawyer with him to the rule to show cause hearing.  He did retain me after being sentenced to jail.  At that point we had very limited options to get him out of jail, get the future child support worked out, and get some of the arrears paid for, and to pay for his former wife’s attorney fees.  They really had a lot of leverage.

So, what should he have done?

Any issue related to children: custody, visitation and child support – are subject to modification by the Family Court upon a showing of a substantial change in circumstances.  This particular client should have consulted with a lawyer as soon as he lost his job and especially after he was unable to quickly find a new job.  It only worked against him to continue to fall further and further behind.  Rather than looking out for himself, it looked like he was a deadbeat dad and didn’t care about supporting his children.

If you find yourself falling behind in child support, meet with a lawyer now.  You should obtain some legal advice about your options.  If you like, you can set up a consultation to discuss your case now.

Potential Income Used for Calculating Child Support

Sometimes potential clients for issues of alimony or child support ask about what would happen if their spouse quit their job or was fired or laid off and their income dramatically changed. Typically, the other spouse threatens you by saying if you file for child support or alimony I will just quit my job and you won’t get any money from me.  Sometimes, the threat may be to just quit working the consistent overtime hours that are always available to significantly reduce the payor spouse’s income.

Last year I represented a client whose husband of 30 years abruptly left the home, quit his job that paid over $100,000 per year, and moved out of state in an effort to avoid having to pay his wife alimony.  She came in very concerned that she would not be provided for financially.  Here’s what we discussed:

Potential Income Used in Calculation of Child Support

The South Carolina Child Support Guidelines set out the following as it relates to potential income:

“If the court finds that a parent is voluntarily unemployed or underemployed, it should calculate child support based on a determination of potential income which would otherwise ordinarily be available to the parent.”

“In order to impute income to a parent who is unemployed or underemployed, the court should determine the employment potential and probable earnings level of the parent based on that parent’s recent work history, occupational qualifications, and prevailing job opportunities and earning levels in the community.”

This means that a party who the Court finds has greater potential income than they are showing at that time due to intentionally quitting his/her job (or somehow have their income reported as much lower than normal) during the time that a child support matter is ongoing the Court may calculate the child support as if the payor spouse was still making the larger amount of money.

Potential Income Used For Calculation of Alimony

When a Court is determining whether to award alimony to a spouse in South Carolina, they refer to the statute that sets out the factors for the court to consider.  After weighing all of the factors, the court will have a lot of discretion in determining the amount of alimony to award. Among the 13 factors outlined in SC Code §20-3-130(c), sub-paragraph 4 states that the Court must consider, “the employment history and earning potential of each spouse”.

So, if your spouse threatens to quit his/her job to reduce the amount of alimony he/she would otherwise have to pay, you can be sure the Court will consider that in the alimony determination.

Who Gets to Claim the Children on Taxes?

In a custody case, one of the issues involved in many negotiations is who will get to claim the children as dependents on their income tax returns.  This is called the dependency exemption.  Children can be quite valuable when it comes to filing taxes and how much a person will owe or receive back as a refund.  Many clients, especially lower income clients who receive the Earned Income Tax Credit can receive thousands of dollars back which is more than several months of income from their job.

South Carolina Family Courts have the authority to determine which parent gets to claim the children on the income tax return (SC Code Ann. §20-3-130(F)); however, the Court will not be able to allocate or distribute this exemption unless it is specifically asked for or allowed to be tried as an issue without objection from both parties.

Typically, the custodial parent will be awarded the dependency exemption; however, if the non-custodial parent is allowed to claim the dependency exemption for one or all of the children, the custodial parent will be required to complete and execute IRS Form 8332 each year and that form must be included with the non-custodial parent’s tax return when he/she files it.

But what if you don’t have a court order – before anyone has filed for custody?  The IRS has a five part test for determining which parent may claim the dependency exemption:

  1. Relationship;
  2. Age;
  3. Residency;
  4. Support;
  5. Joint Return.

The Relationship test means that the dependent you are claiming is your son or daughter (natural or adopted), a foster child, brother, sister, half-brother, half-sister, or a descendent of any of them.

The Age test simply means that your child is under age 19 at the end of the year and younger than you (or your spouse) or they are a student under the age of 24 at the end of the year and younger than you or your spouse.  Finally, regardless of age, you may claim a child if they are permanently and totally disabled.

To meet the requirements of the Residency test, your child must have lived with you for more than half the year. There are some exceptions for temporary absences such as illness, education, military service, or vacation.

The Support Test requires that you provided at least one-half of your child’s support for the year and the child did not provide more than one-half of his/her support for the year.  Most of the time this is not an issue; however, if your child works and earns enough income to support himself/herself, then you may lose this credit.

The Joint Return test means that the child cannot file a joint return for the year.

Tie Breakers

Absent a Family Court Order outlining who can claim the children, it is entirely possible that both parents would qualify to claim the child as a qualifying dependent using the dependency exemption.  So who would get to claim the child in that case?

  • If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year.
  • If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year.
  • If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person’s AGI is higher than the highest AGI of any of the child’s parents who can claim the child. If the child’s parents file a joint return with each other, this rule can be applied by dividing the parents’ combined AGI equally between the parents.

Is Overtime Counted when Calculating My Child Support?

working-overtimeFirst, a short story…About two weeks after I was sworn in to practice law, my boss, who was the only other lawyer in our office, was temporarily suspended from the practice of law.  At the moment that telephone call came in about the suspension I was the only lawyer in the office and took over responsibility for a large number and a large variety of cases.  One of those revolved around the custody, visitation and support of a child and the temporary hearing was happening about an hour after finding out my boss was suspended.

So I crammed to prepare for the hearing as much as I could, my client prepared his own financial declaration and brought it to court without my review (a lesson I learned the hard way) and we met at the family court to prepare for the hearing.  At the hearing, the judge reviewed the financial declarations from both of the parents and the pay stubs that are required to be submitted along with the financial declaration.  Then he got this puzzled look upon his face.  He feverishly typed away on his calculator and made some notes.  Then he began berating my client with questions about his income which eventually led to the judge to declare that he was turning my client in to the solicitor’s office for perjury by submitting a false financial declaration.

The issue revolved around my client’s income and the overtime he received at work.  He took the advice of a friend who said the court cannot take your overtime into consideration rather than asking his attorney what to put.  While we were able to work things out with the judge and smooth things over so there was no issue of perjury, the question came up multiple times during my representation of him.  Is my overtime included in the calculation of child support?

The first stop I make is to the Family Court Rules to review Rule 20 regarding financial declarations.  Rule 20 requires a financial declaration “[i]n any domestic relations action in which the financial condition of a party is relevant or is an issue”.

Next, we’ll head over and review the South Carolina Child Support Guidelines.  A party’s gross income is defined by the child support guidelines as, “the actual gross income of the parent, if employed to full capacity, or potential income if unemployed or underemployed.”  It goes on to state that gross income includes “income from any source including salaries, wages, commissions…” and most other types of income.  Your overtime income falls under wages and is not specifically labeled as “not gross income” anywhere in the guidelines.

Finally, we can review footnote 2 to Form 430, the financial declaration form, that describes how to calculate your overtime.  Essentially, your overtime will be averaged out over the year so you won’t be penalized if you just happen to find yourself in court determining the child support amount during the part of the year when you receive a large amount of child support.

 

College Expenses…Whoa now!

Here’s an article that I recently wrote for the Legal Staff Professionals of Greenville (LSPG) monthly newsletter.

It’s that time of year again – school is back in session.  These days college seems to be automatic for most high school graduates.  The process begins early in high school preparing for entrance exams and completing applications, and with state support for colleges decreasing, the prices for those incoming freshmen, and their parents, continue to rise.  College expenses are hard on married couples, but at least the child support laws allow divorced parents can get help from their former-spouses for college expenses, right?

South Carolina Code §63-3-530(A)(17) states that the Family Court has jurisdiction to make orders for child support to run until the child turns eighteen (or until the child graduates from high school), becomes married or self-supporting.  The statute goes on to allow a court order for child support past the age of eighteen when there is a specific agreement, when there are physical or mental disabilities of the child or in “other exceptional circumstances that warrant the continuation of child support beyond age eighteen.”

In 1979, the South Carolina Supreme Court decided Rinsinger v. Rinsinger, 273 S.C. 36, which a child support order to continue past age eighteen because of college expenses incurred by the child and in part due to the parent’s ability to pay.  It is important to note that this child support could only be continued from a previous order and not a new petition filed for child support.  In this decision, the Court considered a child wanting to go to college as an “exceptional circumstance” provided they showed the aptitude for doing well, desired to attend college, and the parent’s had the financial ability to pay for college.

This would seem to be a nice bonus to be able to offer our divorce and child support clients.  But, everything changed this year.

On April 19, 2010, the South Carolina Supreme Court ruled in Webb v. Sowell, 387 S.C. 328, that treating supporting parents in to different ways (those with a previous child support order and those without a previous support order) failed the rational basis test and violated the Equal Protection Clause of the United States Constitution.  The current court position on this topic is that neither parent has a common law duty to provide for the post-secondary educational expenses of their children and that the statute should not allow the court to continue a previous support order beyond age eighteen for one supporting parent when they could not institute a new support order after age eighteen for another supporting parent.  Because it treats two different “classes” of people differently, the statute is unconstitutional.

Based on the decision in Webb, it appears that a court will no longer consider college expenses to be an “exceptional circumstance” that allows them to continue child support and the only way to attempt to have a former-spouse assist with college expenses would be to include a very specific provision regarding college expenses in a separation agreement during the initial divorce/custody litigation.