How “Potential Income” is Used to Determine Child Support Obligations
Divorce can bring out the worst in people. Underhanded actions and tricks designed to hurt the other spouse and gain an advantage in the proceedings are all too common. In many cases, a spouse will engage in devious tactics to avoid support and to try to reduce the amounts he or she must pay for child support.
Since support obligations are in part determined based on the assets and income of the parent from whom payments are sought, a less-than-honest spouse may try to make it appear that they have significantly less money than they actually do. This can involve concealing or transferring assets. Sometimes, however, a spouse will also intentionally reduce their income through “voluntary underemployment” or taking a job that pays less than they previously were earning, solely to stick it to the other parent or deny their child the support they deserve.
Luckily, Colorado law provides a way for parents who are intentionally tanking their income to be held to account.
When determining the amount of child support a parent will have to pay, a court will consider a number of factors, including the respective financial resources of each parent.
The “financial resources” of a parent include their income, such as salaries, wages, tips, commissions, bonuses, and payments received as an independent contractor.
Initial support obligations are calculated as part of the divorce proceedings but child support can later be modified at the request of one of the parties if there has been a substantial change in circumstances, such as an increase or decrease in the amount of one of the parent’s incomes. But if it can be shown that a reduction in income – such as quitting a job or taking a much lower paying job – was voluntary and done in bad faith, a Colorado family court can base its support calculations on the parent’s “potential income” rather than their actual, reduced income.
Related article: Modifying Child Support After a Colorado Divorce
C.R.S. §14-10-115(b)(I) provides that:
If a parent is voluntarily unemployed or underemployed, child support shall be calculated based on a determination of potential income; except that a determination of potential income shall not be made for a parent who is physically or mentally incapacitated or is caring for a child under the age of thirty months for whom the parents owe a joint legal responsibility or for an incarcerated parent sentenced to one year or more.
As the Colorado Supreme Court has held, courts need to look at all of the facts and circumstances of a parent’s employment situation before determining whether or not their situation was “voluntary”:
“trial courts must examine all relevant factors bearing on whether the parent is shirking his or her child support obligation by unreasonably foregoing higher paying employment that he or she could obtain, and, if the parent is, the trial courts must determine what he or she can reasonably earn and contribute to the child's support. If the trial courts do not find that the parent is shirking his or her child support obligation by unreasonably foregoing higher paying employment, they should calculate the amount of child support starting from actual gross income only.”
IN RE J.R.T. v. MARTINEZ, 70 P.3d 474 (Colo. 2003)
Good Faith Career Choices Will Not Be Held Against a Parent
There are three specific employment situations which will not result in a court finding that a parent is “underemployed” for purposes of using “potential income” as the basis for determining child support:
- The employment is temporary and is reasonably intended to result in higher income within the foreseeable future; or
- The employment is a good faith career choice which is not intended to deprive a child of support and does not unreasonably reduce the support available to a child; or
- The parent is enrolled in an educational program which is reasonably intended to result in a degree or certification within a reasonable period of time and which will result in a higher income, so long as the educational program is a good faith career choice which is not intended to deprive the child of support and which does not unreasonably reduce the support available to a child.
Every one of us has our own unique career journey which can include ups and downs, setbacks and advancements. Whether a parent’s career choices will be held against them in terms of their child support obligations will depend on their unique facts and circumstances and whether or not those choices were made in good faith or were made solely to skirt their obligations under the law.