One-time Bonuses Not Always Included in Salary Calculations
Tennessee child support law determining income from the Tennessee Court of Appeals.
DANIEL J. VELEZ v. CHRISTY M. VELEZ – Tennessee child support laws
Daniel Velez (the Father) and Christy Velez (the Mother), were married for twelve and one-half years, and had two children. In September 2010, the Father filed for divorce in the Montgomery County Circuit Court. Throughout most of the marriage, the Father was in the United States Navy and at times deployed overseas. He was discharged in October 2008. The Mother had a high school education and was primarily a stay-at-home mom. Occasionally the Mother worked at minimum wage jobs. The son, aged seven, and the daughter, aged three, attended private educational programs. The Father’s child support was set at $586 per month but would increase to $866 when Mother’s Social Security disability ceased.
Trial Court: Bonuses Not Included
The Father testified before the trial court that he made $70,000 and earned additional income through bonuses and Social Security. The Father earned performance-based bonuses, had received a $2,500 signing bonus, a $500 fourth-quarter bonus, and a $1,000 bonus. The Father also received $1,355 in Social Security benefits and $1,600 in military disability, which was expected to end in June of 2011.
The trial court set the Father’s income at $9,238.33 based upon his salary at Military Systems Group, his military disability, and Social Security benefits. The trial court specifically excluded the Father’s bonuses and found that there was not a sufficient history of bonuses to include it in the calculation. The trial court included a requirement that Father should immediately notify Mother of any bonuses that he received.
The Mother appealed this decision, and argued that the bonuses should have been included in the salary calculation. The Tennessee Child Support Guidelines provide that “variable income such as commissions, bonuses, overtime pay, dividends, etc. shall be averaged over a reasonable period of time consistent with the circumstances of the case and added to a parent’s fixed salary or wages to determine gross income” (see TENN. COMP. R. & REGS. 1240-2-4-.04(3)(b)).
The Court of Appeals upheld the decision of the lower court. The court held that while the Guidelines do include bonuses as part of include for child support calculations, in this case the Father only received a few bonuses which were not guaranteed to continue into the future.
Mother’s Income to be Recalculated
The trial court calculated the Mother’s salary at $1,642.00 per month, although she was not employed at the time. The trial court based this finding on an hourly wage of $8 per hour. However, the Mother was not employed and the evidence showed that her only work experience was at periodic minimum-wage jobs. The trial court found the Mother to be under employed. While the court can consider the potential earning capacity of the Mother, there was no evidence at trial that proved the Mother earned or would be able to earn more than minimum wage. On appeal, the court held that the Mother’s imputed income should be based upon the federal minimum wage, which is $7.25.
The trial court made a mistake when it found that the Mother’s Social Security income was $255 per month. The correct amount, based on all the evidence brought at trial, was $225 per month. The Court of Appeals sent the case back to the trial court and ordered that this amount be used in calculating child support.
Additional Requests: Child Care, Health Insurance, Tax Exemptions
The Mother argued that the trial court should have included a child-care expense when calculating her salary. The trial court did not include this sum because the Mother was not working at the time. The Court of Appeals upheld this decision but also stated that if the Mother obtained employment or started classes, the child care costs associated with these changes, she could petition the court for a change in the child support award.
There was a dispute regarding the amount of health insurance the Father paid for the children. The Court of Appeals asked the lower court to recalculate this figure.
Finally, the Mother argued that the Federal tax exemption for the children should have been awarded to her, the primary residential parent, and not to the Father. The Guidelines assume that the primary residential parent receives the exemption, but the courts have discretion. This discretion rests on the facts of the particular case. The Court of Appeals did not detail why the trial court was correct, but found that there was “no abuse of discretion” on the part of the lower court and therefore upheld the decision.
Velez v. Velez, 2012 WL 3104922 (Tenn. Ct. App. July 31, 2012).
See original opinion for exact language. Legal citations omitted.
Memphis divorce attorney, Miles Mason, Sr., JD, CPA, practices family law exclusively with the Miles Mason Family Law Group, PLC. To learn more about Tennessee child support laws and guidelines, read and view:
