Question: I am recently medically retired from the Army at 14 years. My retirement was due to combat injuries and my income is non-taxable.
I have heard that my type of income is not considered income for child support purposes since no taxes are paid and it is not reported to the IRS.
Is this true?
VA disability benefits are not taxable and are excluded from the retiree’s disposable pay. As a matter of federal law, state courts cannot, strictly speaking, invade them and award the service member’s ex-spouse a share. (Note, the same is not true for VA retirement pensions. State courts have authority under the Uniform Services Former Spouses’ Protection Act, 10 USC 1408, to divide these, just as they would any other pension). This does not mean the state courts cannot consider the benefits as “income” for child support purposes. They may.
The amount of each parent’s child support is usually a proportionate share of that parent’s income in relation to both parents’ income for each overnight of physical custody/parenting time. Most states have mandatory child support formulas to calculate this amount. “Income” includes all income, not just taxable income. This means returns on property, loans from friends, earnings a parent is capable of generating but does not, and untaxed disability payments are income. Strange as it may seem, a parent with a higher income may end up paying child support even though he has his child (and supports his child on his time) as often as the other parent.
However, most states will allow parents to motion for or consensually opt-out of the statutory amount under certain conditions. Most states will also allow courts to consider “the totality of the circumstances” (e.g., undeclared disability payments to deviate from the statutory amount. The conditions to opt out or deviate vary by state, and the likely success varies by the temperament of the judge or family court referee deciding your motion, but, in general, the motioning party(ies) must show the statutory amount is “unjust and inappropriate” and that the opt out or deviation is in the child’s best interests.
Keep in mind that I am a Michigan attorney and cannot give you detailed advice about the laws in Colorado. You should not rely on this answer as establishing an attorney-client relationship, and you should contact an attorney in your area immediately if you need additional information or legal representation, as most parties in child support cases do. Cordell & Cordell has offices in Boulder, Colorado Springs and Denver, Colorado.
Jennifer M. Paine is an Associate Attorney in the Detroit, Michigan office of Cordell & Cordell P.C. She is licensed to practice in Michigan, and has been admitted pro hac vice in Illinois, Ohio, and the United States Court of Federal Claims. Ms. Paine received her BA in English and Mathematics from Albion College and graduated Summa Cum Laude. She received her Juris Doctorate from MSU College of Law and graduated Summa Cum Laude.