bonus and commission income

In earlier blogs, I’ve discussed some of the challenges that arise when calculating child support, especially when it comes to determining the correct income to use.  Here’s another issue that I often see.

Bonus and Commission Income

Colorado law says that bonuses are income to be included when calculating child support (typically averaged over 12 months and added to the regular monthly income).  In my experience, this is one of the most contentious issues, especially where bonuses are discretionary by the employer. 

A parent who received a bonus one year is often concerned that, if the bonus is included in income, he/she won’t receive a bonus the next year.  The other parent is concerned that if the bonus isn’t included, and the other parent does get future bonuses, the child support figure is unfair because it’s based on income that is too low.  Another concern can arise when the bonus is a one-time annual payment, but the monthly child support payment is based on the bonus being averaged over the year (even though not received monthly).

Under Colorado law, commissions are also income to be included when calculating child support (also usually averaged over 12 months and added to the base monthly income).  The parent with the commission income can be concerned because, although their commissions may vary from month to month, the child support is a set monthly amount.

These are perfect situations for resolution through mediation.  Judges are bound by the law and often don’t have the flexibility to account for these type of circumstances in calculating child support.  In mediation, parents can get much more creative and case-specific. 

I often help parents craft agreements where there is a base monthly child support amount, and then bonuses and/or commissions are shared as received (sometimes through a quarterly settle-up).  That way, a parent isn’t paying child support based on income that he/she doesn’t have, but the other parent is getting the child support benefit when/if that additional income is received.