In re Marriage of Nelson - 570 N.W.2d 103 (Iowa 1997)

Rule:

In applying the child support guidelines, net monthly income of both custodial and noncustodial parents must first be deduced. All income that is not anomalous, uncertain, or speculative should be included when determining a party's child support obligations. When deciding whether bonuses are to be included in gross income, the court examines the employment history of the payor over the past several years to determine whether the amount of money paid from year to year is consistent. If so the bonuses should be included in gross income.

Facts:

Respondent-appellant Scott J. Nelson and petitioner-appellee Jane M. Herbers married in 1984, and were parents to two children. Their marriage was dissolved in September 1989.  At that time, respondent was a law student. The parties agreed that respondent’s completion of law school would be a substantial change in circumstances justifying a review of child support. The original decree ordered respondent to pay $ 137.50 per month per child in child support. In March 1993, petitioner filed a modification action requesting an increase in respondent’s child support payments. The district court increased respondent’s child support payments for both children to a total of $425 per month. In 1995, petitioner filed a second modification action seeking an increase in child support payments. At trial, petitioner offered evidence that respondent’s income had increased from $ 15,000 per year in 1991 to $ 38,524 in 1994. Respondent argued that excluding the bonus he received in 1994 his net annual income increased only $ 408 from what he earned in 1993. The district court found respondent’s income had increased to $31,525 and accordingly increased his child support obligations to $ 695 per month. Respondent appealed from the district court’s order, contending that the district court did not correctly calculate his income and that of his former wife. The court of appeals affirmed.

Issue:

Did the trial court correctly rule on the issue of the respondent’s child support obligations? 

Answer:

Yes, with modifications.

Conclusion:

The court noted that in applying the guidelines on child support, net monthly income of both custodial and noncustodial parents must first be deduced. According to the court, all income that was not anomalous, uncertain, or speculative should be included when determining a party's child support obligations. In this case, the court held that the district court correctly calculated Scott's annual gross income to be $ 31,525, based on his 1994 income. Such figure excluded a $7000 bonus respondent received that year for performing legal work for a partner who was sick. The court held that such income was not likely to recur. The court further held that the trial court correctly ruled that indebtedness payments were not to be deducted from a parent's income when calculating child support payments. Thus, respondent’s monthly law school loan payments were not to be deducted in calculating his monthly net income for child support guideline purposes. However, the court held that the trial court was incorrect in not deducting $ 2172 from the ex-husband's gross income for health insurance he provided for his children. The court vacated the decision of the court of appeals and modified and affirmed the trial court judgment.