TN Mom’s Bonus Not Included in Income | Dad Voluntarily Underemployed

Tennessee child support law in Tennessee divorce & family law from the Tennessee Court of Appeals.

Kathleen Anne Dilley v. James Kevin Dilley – Tennessee Child Support Law – Income Determination – Bonus & Voluntary Underemployment

Dilley: Appeal to Recalculate both the Mother’s and Father’s income for Child Support

Kathleen Anne Dilley (the Mother) and James Kevin Dilley (the Father) were divorced on November 16, 2009 after being married for seven years. There were no children from this marriage, but the Father had a child from a previous marriage whom the Mother adopted when the child was nine years old. The trial court named the Mother the primary residential parent and also ordered Mother to make monthly child support payments to Father in the amount of $707 per month.

In this case, the trial court awarded the Mother custody of the child, who was sixteen and had a serious drug problem.  The trial court found the Mother more responsible and better able to handle the particular needs of the child.

The Father appealed the decision of the trial court, and argued that the Mother’s bonuses and stock options, in addition to her base salary, should have been included in the calculations for child support.  According to the Tennessee Child Support Guidelines, variable incomes such as bonuses and commissions may be included in the calculation of a parent’s salary for purposes of determining child support.  The courts generally take the approach that these variable incomes be averaged out over several years, to give a true picture of the annual income.

Bonus Not Included in Mom’s Income for Tennessee Child Support Income Determination

The trial court accepted the evidence presented by the Mother that her salary changed from year to year, and based the Mother’s income on her gross base pay of two hundred thousand dollars per year or $16,666.00 dollars monthly.  The trial court also accepted the Mother’s testimony that although she had received bonuses in the past, these were based on the company’s performance and she did not know if she would receive any bonus for the 2009 year.  The trial court held that these bonuses were not guaranteed.  The trial court also accepted testimony given by both the Mother and a company representative that the stock options had no current value.

The Mother also had additional expenses in caring for the child, including medical insurance for the child ($134.00 per month) and the cost of a supervisor for him because of behavioral problems ($303.00 per month).

The Court of Appeals upheld the trial court’s decision and held that the trial court did not abuse its discretion when it based the Mother’s income on her gross base pay of $200,000.  Part of the trial court’s role was to assess the credibility of the parent who claims she will not receive a bonus, knowing that this testimony will decrease her child support obligations.  The Court of Appeals had no evidence to counter the Mother’s claim.  The Court of Appeals held that if indeed the Father had evidence that the Mother received a bonus for the 2009 year, he could file a petition with the trial court to modify her child support obligations.

The Mother argued on appeal that the Father’s business income should have been used to determine his share of the child support award.  The trial court used the Father’s previous salaried income when it determined his share of the child support.  The Father earned $77,829 in salary in 2006.  In 2008, his gross receipts for his personal business were $203,364, although he claimed his net income was only $20,847.

Father Found Voluntarily Underemployed

The trial court found the husband to be voluntarily underemployed and earned less than his potential.  In such a case, the Guidelines provide that the parent’s education, training, ability to work and past and present employment can be considered in order to determine the correct amount of child support that parent must pay.  The trial court ruled that the gross receipts from the Father’s business did not reflect his actual income.  The Father’s past salary (of over $77,000) reflected his true potential earning capacity before he became underemployed.  Based on this finding, the trial court allocated the Father additional income to cover child support needs.  The Court of Appeals upheld this decision.

M2009-02585-COA-R3-CV, 2011 WL 2015395 (Tenn. Ct. App. May 23, 2011).

See original opinion for exact language.  Legal citations omitted.

Read Commissions and Bonuses as Income Under Tennessee Child Support Laws for more information.  See Tennessee Child Support Answers to FAQ’s, for legal updates, news, analysis, and commentary, visit our Tennessee Family Law Blog and its Child Support category.  A Memphis child support attorney from the Miles Mason Family Law Group can help you with Tennessee child support issues including setting or modifying child support. To schedule your confidential consultation about Tennessee child support, call us today at (901) 683-1850.