Child Support Orders and Gross Income

CRAVEN CTY. V. HAGEB, 2021-NCCOA-231

Child support in Greensboro is most often calculated using guidelines and worksheets that provide a formula based on income, overnights with the child, and some other factors. A failure to follow the guidelines is error that can be appealed. Most often, the biggest factors are going to be gross income and custodial schedule. North Carolina courts require more than unsubstantiated conclusions about gross income. Below is a case that discusses what more is needed to support an Order for child support.

Facts:  Father was in a case for child support for two minor children born of a relationship with Mother. In 2019, the trial court entered an Order for child support, ordering that Father is to pay $2,605.22 per month. However, the trial court order merely concludes that Father’s gross income is $19,454.39 per month, after reviewing Father’s tax returns. It also decided not to include income from “gaming and lottery.” Other findings gave Father credit for supporting one child that was residing with him, but not another. Presumably this was because Father was not listed as the biological father on that child’s birth certificate and that father had “significant personal expenses as business expenses.” No worksheet was attached to the Order.

Error:  Yes.

Rationale:  The calculation of gross income is not a finding of fact, but a conclusion of law, and therefore is reviewable de novo. Gross income is defined by the guidelines as a parent’s “actual gross income from any source, including not limited to income from employment or self-employment . . . [or] ownership or operation of a business, partnership, or corporation[.]” When self-employed, it is calculated based upon gross receipts minus the “ordinary and necessary expenses required for self-employment or business operation.” Since the trial court’s Order failed to give reason as to how it derived Father’s gross income amount, other than a figureless statement that it was based upon tax returns, the Court of Appeals cannot determine whether the gross income was miscalculated. There needs to be an explanation for how the trial court arrived at a figure. Furthermore, a conclusory statement that Father’s personal expenses were tied into his business expenses was not enough. While judges do have discretion to weigh evidence and disregard evidence, it must articulate the reasons for doing so. If Father’s evidence on his tax returns shows that personal expenses were mixed in with his business expenses, the trial court ought to have articulated which ones were being considered personal, which were legitimate business expenses, and what those conclusions meant for the child support gross income calculation.

Notes:  Gross income can be a complex calculation if self-employment is involved. There can be many moving pieces. The goal is to get an accurate calculation so that the Court can determine an accurate child support obligation. The case above illustrates how important it is to draft a detailed and sufficient Order, but also to present competent evidence at trial so that there is good evidence upon which to base a gross income calculation. If your case has complex income derivations, please contact a family law specialist to discuss the options.