Are Commissions and Bonuses Income for Child Support Calculations?

How do commissions and bonuses factor into child support when they vary month to month and year to year? When determining child support, the court determines the gross income for each party, and then puts that income in the guidelines child support calculator. The calculator determines what each party should owe for child support and factors in parenting time as well as health and childcare costs.

The first step though is determining gross income. For parties who have a full-time job and a salary or an hourly wage, determining gross income is as simple as looking at each party’s W-2. For parties who have a base salary plus commissions or bonuses, determining gross income is a more complex process. Gross income is defined in Minnesota Statute 518A.29 as “any form of periodic payment to an individual, including, but not limited to, salaries, wages, commissions, self-employment income……”

When commissions are varied from month to month and year to year, it can be difficult to set c/hild support based on commissions. One method of factoring commissions into a gross income amount is to take an average of the commissions using employment records over the past year or more. If a party has a new job, or hasn’t been at the job long enough to show a pattern of commissions, it may be very difficult to factor commissions into the child support calculation.

The most difficult scenario is the situation where commissions may have been historically high but due to economic factors, commissions and sales opportunities have dropped. The court has to balance the interest in providing children the support they deserve, and the realistic income available for support. As you can imagine, this can be a complex balancing act.

Bonus income can be even more problematic. While bonuses are generally not guaranteed (thus not “wages”), there are situations where an employee regularly gets his/her bonus. If an employee has historically received a bonus every quarter, or year, in which a bonus is available, the bonus income may be considered “regular” income for determining gross income under Minn. Stat. 518A.29. If a party has not gotten every bonus, it will be more difficult to claim the bonus is regular income for child support purposes. Similar to commission, a new job or an industry experiencing a downturn may be a difficult situation in which to calculate a bonus because the bonus history is not reliable.

Determining child support can involve a complicated legal analysis and even small details can make a difference from one case to the next. The best way to determine the of child support due in any case is to consult with an experienced family attorney. Christine Callahan has represented obligors and obligees alike and she can help you analyze the possible outcomes for child support in your case.