Sunday, January 29, 2012

Computing Child Support in Texas

NOTE: This post has been updated for the new ceiling on net monthly resources that became effective on September 1, 2013.

There is a long story and a short story here. The long story is contained in this blog post. If you just want to compute child guideline child support without getting to know the details of how and why it is calculated the way it is, use my Texas child support calculator.

In Texas, child support is almost always set according to a set of guidelines contained in the Texas Family Code. These guidelines are established by the state legislature and supersede any local rules or any rules that the Texas Supreme Court might come up with. (Tex. Family Code §§ 111.001 and 111.002).

The child support guidelines apply to final orders in matters involving children, but they also apply to temporary orders. Tex. Family Code § 105.001(g). However, because temporary orders cannot be appealed, for the most part, the court still has significant authority to deviate from guidelines both under the Texas Family Code and under the Texas Rules of Civil Procedure.

Deviation from Guidelines
The final child support can deviate from guidelines. That means that the final amount of child support ordered can be more or less than what a strict adherence to the Texas child support guidelines would suggest. There are three ways a child support order can deviate from guidelines.

1. Temporary Orders
As mentioned above, the trial court has significant latitude in setting child support during the pendency of a matter. This may be for a number of reasons including the likelihood that information available to the court at a temporary orders hearing is far from complete. The court is not required to explain why it is apparently or even in fact deviating from guidelines in temporary orders.

2. Agreement of the Parties
Parties to a Texas child support order are more likely to follow the order if they had a hand in developing the terms of the child support order. Recognizing this and wanting to promote the amicable resolution of family disputes, the legislature has ordered the district courts to honor agreements between the parties regarding child support if the court finds that the order is in the children's best interest. Tex. Family Code § 153.601(4). My experience is that judges will almost always honor the agreement of parties represented by attorneys. Judges can get suspicious if the side that appears to have the upper hand in the child support order is represented and the other side is not. Moreover, some judges will always make the parties explain an unobligated order, i.e. one that calls for ZERO child support.

3. Order of the Court
The guidelines written by the legislature are presumed to be in the best interest of the child. Tex. Family Code § 154.122. However, a party can ask the court to deviate from guidelines. The court may consider a number of factors, including but not limited to those listed by the state legislature, Tex. Family Code § 154.123. To arrive at an award of child support that is above guidelines, the party seeking the higher-than-guideline support must establish that the proven needs of the child exceed guideline child support. Then the court must subtract guideline support from the total proven needs of the child and then allocate the remainder between the conservators (parents). Tex. Family Code § 154.126. If the court deviates from guidelines, then if either party asks why, the court must explain itself in writing. Tex. Family Code § 154.130.

Computing Guideline Child Support in Texas
There are only three steps to computing guideline child support in Texas. First, you compute the total monthly resources (gross income) available to the obligor (person who has to pay child support). Then you subtract a few items such as Social Security, Medicare, and income taxes to arrive at Net Monthly Resources. Finally you select a factor to apply based on the number of children the parties have together and other children the obligor must support and multiply that factor by the lesser of Net Monthly Resources or $8,550 with the result being guideline child support.

Step 1: Compute Total Monthly Resources
In the majority of cases that I work with, this is the most hotly disputed part of getting to an agreement on child support. One party will accuse the other party of having hidden, income-producing assets in another county, will complain that the pay stubs being sued do not properly account for bonuses and/or overtime, or that an obligor employed by his or her family is having income hidden through deferred bonus payments or fringe benefits (e.g. payments for cell phones, cars, insurance, rent, etc.) that do not show up on the pay stubs. Often, the complaining party is right and getting to the bottom of all this is not an exact science and practitioners are well-advised to make certain their obligee clients understand that fact.

Total monthly resources include:

  1. 100% of wages, salary, commissions, overtime, tips, bonuses and other employment-based income (whether W-2, 1099, or off the books);
  2. Interest, dividends, and royalties;
  3. Net rental income (gross rental receipts less the actual cost of carrying the property);
  4. Gifts, prizes, spousal support, and alimony;
  5. Child support received (yes, some people receive child support from one co-parent and pay it to another). Tex. Family Code § 154.070;
  6. All other income actually received except for Supplemental Security Income (SSI)

Case law instructs that the court can impute income, look at prior years' earnings, and include monetary gifts from parents, and scholarship funds received.

If the court finds that the obligor is intentionally significantly underemployed, the court can use the obligor's earnings potential to arrive at total monthly resources. Tex. Family Code &sect. 154.066. The financial stresses of our current times are causing many people to lose jobs. The loss of a job often leads to divorce. If the obligor is the parent who lost his or her job, then the court finds itself in the conundrum of using the now-unemployed obligor's previous income to set child support (as will be urged by many obligees) or to set child support based on minimum wage, unemployment income, etc. (as will be urged by most obligors). My experience is that many courts will set child support for an unemployed obligor based on their current income or minimum wage, but may impose a prospective order that kicks in a higher amount of child support in 6 months, thus pressuring the obligor to go find a job.

The court can deem income from non-income producing assets, less the cost of carrying the assets, if the court finds that income from those assets is being suppressed to avoid child support. Tex. Family Code § 154.067.

Finally, if the court can find no evidence of the earnings or earnings potential of an obligor, the court may presume that the obligor's total monthly resources is equal to 40 hours per week of minimum wage work. Tex. Family Code § 154.068.

Importantly, The court cannot include the obligor's spouse's income. Tex. Family Code § 154.069.

To smooth out income fluctuations, the court is encouraged to annualize income from each source, add it all together, and divide by 12 to arrive a average total monthly resources. Tex. Family Code &sect. 154.061(a). This should make both side of a case happy. If an obligor recently received a bonus, the obligor would not want that pay check multiplied used as the basis of setting child support. The same would be true for quarterly dividend payments. If the obligor recently received a quarterly or even annual check for dividends, the obligor would not want the court to base child support upon the notion that the obligor receives that kind of income every month. Conversely, obligees should appreciate this approach because it encourages the use of year-to-date (YTD) numbers which will pick up bonuses received in the near past.

Step 2: Compute Net Monthly Resources
Net monthly resources are an important concept in computing child support in Texas. To compute net monthly resources, you start with total monthly resources from Step 1 above, and subtract the following amounts:

  • Social Security and Medicare Taxes. Tex. Family Code &sect.&sect. 154.061(b), 154.062(d)(1);
  • Federal income taxes for a single person claiming one personal exemption and taking the standard deduction. Tex. Family Code &sect.&sect. 154.061(b), 154.062(d)(2);
  • State income taxes paid. Tex. Family Code &sect. 154.062(d)(3);
  • Mandatory union dues. Tex. Family Code &sect. 154.062(d)(4);
  • Amounts paid for health insurance for the children or cash medical support ordered by the court. Tex. Family Code § 154.062(d)(5). If the obligor is insuring more than just the children before the court, then the amount of insurance premiums deducted is prorated based on the total number of children insured. Tex. Family Code § 154.062(e). For example, suppose the obligor pays $350 per month to insure children, that there are two children involved in this case, and that the obligor is also covering three children from another relationship. The proper deduction for health insurance in this case would be to compute the amount paid per child ($350 ÷ 5 children = $70 per child) and then multiplying that by the number of children in this case ($70 per child  x   2 children = $140) and subtract $140 from total monthly resources, NOT $350.
NOTE: The guidelines presume that the obligor will be paying for health insurance for the children. Tex. Family Code § 154.064. If the obligor is not paying for health insurance for the children, the court may require the obligor to pay cash medical support of up to 9% of the obligor's total monthly resources to help pay for the children's medical expenses.

Once these deductions are subtracted from total monthly resources, you have a prospective amount to use as net monthly resources. However, in Texas, guideline child support is based on the first $8,550 of net monthly resources. Therefore, the final number you use for net monthly resources is the LOWER of $8,550 and the amount computed above. Tex. Family Code § 154.125. Put differently, if the amount you compute for net monthly resources above is greater than $8,550, then you use $8,550 as the amount of net monthly resources no matter how much the obligor actually earns.

Step 3: Compute Guideline Child Support
Once you have a figure for net monthly resources, computing guideline child support in Texas becomes quite easy. There is a formula for determining a child support factor to use where there are children from more than one household, Tex. Family Code § 154.128, but it is much simpler to use the table provided by the legislature, Tex. Family Code § 154.129:

Once you have a factor, multiply it by the net monthly resources obtained from Step 2 above and that will be guideline child support in Texas.

An even simpler way to compute guideline child support is to use my Texas Child Support Calculator or my Android App, available through the Google Play Store.

Miscellaneous Notes
First, the payment of child support may not be a precondition for possession of or access to the children. Tex. Family Code § 153.001. Many parents do not understand this. They believe that if the obligor is behind on child support, then the obligee is justified in withholding the children from the obligor. That logic, while understandable in the trench warfare of family law disputes, fails to comprehend the foundational logic of possession & access orders and child support orders.

The legislature has made is clear that above all, the best interests of the children are to be paramount in any decisions regarding the children. Tex. Family Code § 153.002. Possession and access is not about a parent's right to visit with his or her children. Instead possession and access is based upon the presumption by the state legislature that it is in the best interest of the children for them to have a close and continuing relationship with their parents. Tex. Family Code § 153.001. If it's in the children's interest to have a relationship with both parents, that interest does not change simply because one parent is behind on child support or even a complete deadbeat.

Equally true is the rule that an obligor must keep paying child support even if the other parent is refusing visitation. Again, the logic is that the payment of child support is for the benefit of the children and the children certainly don't become less hungry, less in need of shelter, and less in need of financial support just because one parent is withholding them from the other.

Second, a parent who is not named a conservator of the children, perhaps because of a history of family violence, drug abuse, etc., may be ordered to pay child support anyway. Tex. Family Code § 153.075. This too is based on the logic that financial support is for the kids--it is not payment for rights involving decision making or possession and access.

Third, child support should be ordered even if both joint managing conservators of the children. Moreover, may obligors are under the misunderstanding that if they can coax or coerce the other parent into a 50:50 possession schedule, no child support will be due. That's not true. Child support will be ordered even in 50:50 possession schedules. Even courts that ignore the statutory presumption in favor of the standard possession order will order child support be paid by a higher-earning parent to a lower-earning parent.

Finally, many orders contain provisions requiring the parties to mediate disputes in the future prior to going to court. There are normally carve-outs for enforcement actions and emergencies involving the safety and welfare of the children. However, if the court imposes a requirement to mediate (or use other alternative dispute resolution mechanisms) future disputes, modification of child support is not subject to the requirement to mediate prior to filing suit. Tex. Family Code § 153.6031. However, it is likely that a trial court would require the parties to attempt mediation to modify child support if the parties had agreed to do so in their final orders.

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