Opinion ID: 2518798
Heading Depth: 5
Heading Rank: 1

Heading: Glenn's income tax liability

Text: Glenn first contends that the superior court underestimated his annual federal tax liability by adopting Marian's figures. Marian's child-support worksheet projected Glenn's 2005 federal income tax liability from the estimated taxes withheld from his January 2005 earnings. This method yielded an annual tax liability of $3,311. By contrast, Glenn's child-support worksheet used the taxes Glenn had actually paid on the similar wages in 2004; this resulted in a projected tax liability of $4,780. Glenn asserts that his withheld taxes underestimated his actual tax liability because he was under-withholding and that the taxes he actually paid in 2004 provide the most accurate basis for estimating his 2005 taxes. Because the record provides no indication that his tax liability would substantially decline in 2005, Glenn reasons that the court should have used his proposed calculations. In support of his argument, Glenn cites Bergstrom v. Lindback. [25] In Bergstrom the superior court used withholding figures instead of actual income tax liability to calculate Bergstrom's adjusted annual income for purposes of determining his child-support obligation. [26] We reversed, ruling that the court should have relied on Bergstrom's history of actual tax payments: The amount of taxes withheld by an employer may or may not reflect a taxpayer's actual tax liability. Although Civil Rule 90.3(a)(1)(A) refers to mandatory deductions for federal income tax, we believe that Bergstrom's actual tax liability under existing Internal Revenue Service regulations, rather than the amount withheld, is the proper basis for determining the amount to be deducted from his income. Therefore, the trial court erred in reducing [Bergstrom's] adjusted annual income by the amount withheld rather than his actual tax liability.[ [27] ] Marian does not dispute the accuracy of Glenn's 2004 tax liability as a predictor of his future liability; instead, she contends that it was not clearly erroneous for the superior court to find that Glenn's paycheck tax withholdings were an acceptable measure of his 2005 tax liability. Marian points to a footnote in Bergstrom in which we described evidence presented at trial indicating that Bergstrom's employer had made an error in calculating the amount of taxes withheld from his wages. [28] Marian suggests that our ruling in Bergstrom hinged on this evidence, and did not establish a general rule disfavoring use of withheld taxes as an acceptable measure of future tax liability. We disagree with Marian's narrow reading of Bergstrom. Our decision in Bergstrom recognized that [t]he amount of taxes withheld by an employer may or may not reflect a taxpayer's actual tax liability. [29] Given the general unreliability of withholding, we declared that actual tax liability under existing Internal Revenue Service regulations, rather than the amount withheld, is the proper basis for determining the amount to be deducted from [Bergstrom's] income. [30] Here, Glenn provided the superior court with his actual tax liability on comparable wages for 2004, along with rate schedules for his income level and taxpayer status. Marian provided no information indicating that Glenn's actual 2004 tax liability would not accurately approximate his current and future tax liabilities. Given these circumstances, we conclude that Bergstrom required Glenn's actual tax liability for 2004 to be used because it was the most accurate available indicator of his actual liability in the future.