Under the laws in effect as of 2007, child support is based on “parental income for child support” or “PICS.” See Minn. Stat. § 518A.26, Subd. 15.
Gross income under the new law means: the gross income of a parent calculated per the new criteria plus social security or veterans’ benefit payments received on behalf of the child plus the potential income of the parent, if any, as determined under the law minus spousal maintenance that any party has been ordered to pay minus the amount of any existing child support order for other nonjoint children. See Minn. Stat. § 518A.26, Subd. 8.
The new law allows consideration of “potential income” in calculating child support. This is income that it attributed to a party when a parent is voluntarily unemployed, underemployed, or is employed on a less than full-time basis, or there is no direct evidence of any income. The statute provides 3 methods for determining potential income. Determination of potential income must be made according to one of three methods, as appropriate: (1) the parent’s probable earnings level based on employment potential, recent work history, and occupational qualifications in light of prevailing job opportunities and earnings levels in the community; (2) if a parent is receiving unemployment compensation or workers’ compensation, that parent’s income may be calculated using the actual amount of the unemployment compensation or workers’ compensation benefit received; or (3) the amount of income a parent could earn working full time at 150 percent of the current federal or state minimum wage, whichever is higher. See Minn. Stat. § 518A.32, Subd. 2.
If a party fails to serve and file a financial affidavit with their initial pleadings the court shall set income for that parent based on whatever credible evidence is before the court or by setting the potential income for that parent under Minn. Stat. § 518A.32. See Minn. Stat. § 518A.28. The documents that must be provided include pay stubs for the most recent three months, employer statements, or statements of receipts and expenses if self-employed. It also includes relevant copies of recent federal tax returns including W-2 forms, 1099 forms, unemployment benefit statements, workers’ compensation statements and all other documents evidencing earnings or income. See Minn. Stat. § 518A.28.
The court can take an average of a party’s income over a period of years to determine the level of income on which child support should be established. See Veit v. Veit, 413 N.W.2d 601 (Minn. Ct. App. 1987).
Income can also be established through life style. This is especially true in situations where an individual is self-employed. The theory is that the standard of living enjoyed by the individual exceeds the level of income claimed by the individual. See Tuthill v. Tuthill, 399 N.W.2d 230 (Minn. Ct. App. 1987).
A court’s finding on income for the purpose of a child support award must have a reasonable basis in fact to withstand an attack on appeal. See Strauch v. Strauch, 401 N.W.2d 444, 448 (Minn. Ct. App. 1987). A key aspect of income is its periodic nature. Generally, if a payment is periodic, it is income. See Herrley v. Herrley, 452 N.W.2d 711, 714 (Minn. Ct. App. 1990).
A district court’s findings on net income for purposes of child support will be affirmed if those findings have a reasonable basis in fact and are not clearly erroneous. See State, County of St. Louis ex rel. Rimolde v. Tinker, 601 N.W.2d 468, 470 (Minn. Ct. App. 1999). A determination of an obligor’s income for purposes of child support is a finding of fact and will not be altered on appeal unless clearly erroneous. See Ludwigson v. Ludwigson, 642 N.W.2d 441, 446 (Minn. Ct. App. 2002).