Averaging Income in Tennessee Child Support Law
Averaging income in Tennessee child support law helps even out fluctuating income over a reasonable period of time given the facts and circumstances specific to that parent.
Averaged Income Can Even Out Earnings Ups and Downs
In Tennessee, there is a rebuttable presumption that the strict computation of child support is the one that is correct. The analysis always begins with the strict computation, using each parent’s gross income from all sources. But Tennessee leaves open the possibility that recent income is not indicative of the earnings history or the earnings capacity of a parent, and allows the primary residential parent the opportunity to make the argument that the income figure that should be used for the child support calculation should be higher than current income.
One method of approaching the request for use of a higher income than the one reported on the most recent income tax return is to use “income averaging,” meaning that the court should average the reported income of the child support paying parent over a period of years. There is sufficient flexibility in this approach to make the argument for any length of years going into the averaging equation. It is an argument that is dependent upon the facts and circumstances of a given parent. In the Guidelines, see Rule 1240-2-4-.04(3)(b).
Averaged Income May Be More Appropriate in Tennessee Child Support Law
There are several scenarios where an income averaging approach might be appropriate, including, for example, when a parent is reaching the natural winding down of his career due to age. In the case of Betty Berryhill vs. Charles Thomas Rhodes, 21 S.W.3d 188 (Tenn., 2000), the mother successfully argued that to use only the two prior years’ income of the father would be unjust or inappropriate, given his career as a doctor, admitted in 1963, now winding down.
While the mother did not have complete income information, she was able to demonstrate a wide variation in the father’s income during the prior 10-year period. The range of income had a high of $333,856 and a low of $30,388. Because there were some gaps, the Supreme Court remanded the case back to the trial court to complete the information gathering and to determine the appropriate number of years to use in the averaging.
Two Years Income Average Makes Sense in Many Cases
By contrast, consideration of case where a request for a longer duration of income averaging was lost allows us to see how the credibility of the child support paying parent factors into the judicial decision-making process. In the case of Judi Richardson vs. George Kevin Spanos, the Court of Appeals reviewed a trial court decision, including the trial court calculation of the income of the physician father for his child support obligation.
The earnings history in 2001 and 2002 of the father included earnings up to $100 per hour for contract work through West Tennessee Health Care, including annual income information. The father explained through his testimony how that contract had concluded without renewal and, through his employment search efforts, he was able to secure a comparable position at $65 per hour at Jackson-Madison County General Hospital. Evidence was presented of the father’s income during the first three months of 2003 under this new contract.
Affirming the two-year income averaging approach of the trial court, the Court of Appeals expressed its belief from the record on appeal that the father had not taken any affirmative steps to result in a situation of being underemployed. On that basis, it declined to reach further back into the father’s earnings history to create a higher average gross income for purposes of the child support calculation.
Three Years Average Income Also Approved for Setting Child Support
Another example of income averaging is presented through the case of Sean Eric Von Tagen vs. Robin Lynn Von Tagen, No. M2009-00850-COA-R3-CV (Tenn. Ct. App., 2010). Although not discussed at any length in the decision, the appellate court affirmed the approach of the trial court using income averaging to smooth out a one-time influx of income. The specific financial event in this case was the father’s sale of a business, resulting in a one-time capital gain. The income figures were significant: in 2007 the father had total income of $395,930, compared to 2008 and 2009 income of $50,000. Using a three-year income averaging, the court set the father’s income for purposes of child support computation at $165,300 per year.
References, Resources and More:
- Tennessee Child Support Laws
- Tennessee Child Support Law Answers to FAQs
- Tennessee Child Support Calculator & Links to App
- Tennessee Parenting Plans and Child Support Worksheets: Building a Constructive Future for Your Family
- For analysis, updates, commentary and case law summaries, view the Tennessee Child Support category of our MemphisDivorce.com Tennessee Family Law Blog.