Opinion ID: 2308509
Heading Depth: 2
Heading Rank: 1

Heading: Tax Rates

Text: [¶ 8] In calculating its child support award, the court found that Charles paid no state tax on his base pay, and no federal or state taxes on his military allowances. [2] After observing that the child support guidelines factor in an assumption that all income is taxable, [3] the court adjusted Charles's $50,055 annual income by applying a presumed federal tax rate of 20%, and a presumed state tax rate of 6%. As a result, the court imputed to Charles additional income of $7892 from his base pay and allowances. [4] [¶ 9] The method for calculating a party's child support obligation is prescribed by statute. 19-A M.R.S. §§ 2001-2012 (2007). It requires that: After the court or hearing officer determines the annual gross income of both parties, the 2 incomes must be added together to provide a combined annual gross income and applied to the child support table to determine the basic support entitlement for each child. 19-A M.R.S. § 2006(1). Once certain additions are made in order to arrive at a total basic support obligation, that amount is divided between the parties in proportion to their respective gross incomes. 19-A M.R.S. § 2006(4). [¶ 10] The term gross income is also defined by statute. The portions applicable here provide that: A. Gross income includes income from an ongoing source, including, but not limited to, salaries, wages, commissions, royalties, bonuses, dividends, severance pay, pensions, interest, trust funds, annuities, capital gains, social security benefits, disability insurance benefits, prizes, workers' compensation benefits, [certain] spousal support . . ., and educational grants, fellowships or subsidies that are available for personal living expenses. . . . B. Gross income includes expense reimbursements or in-kind payments received by a party in the course of employment . . . if [they] reduce personal living expenses. 19-A M.R.S. § 2001(5)(A), (B). [¶ 11] This definition speaks to ongoing cash benefits actually received. See Dep't of Human Servs. v. Monty, 1998 ME 11, ¶ 6, 704 A.2d 401, 403 (The plain language of [the statute] is clear  gross income only includes income from an `ongoing source.'). It makes no provision for directly imputing income beyond monies actually received based on a party's tax situation. [5] When the Legislature intended to allow for imputed income to be included in the child support calculation, it said so explicitly. See 19-A M.R.S. § 2001(5)(D) (Gross income may include the difference between the amount a party is earning and that party's earning capacity when the party voluntarily becomes or remains unemployed or underemployed . . . .). [¶ 12] A court may consider tax consequences in justifying a deviation from the child support guidelines if one party is awarded a tax benefit, such as the right to claim a child as an exemption. 19-A M.R.S. § 2007(3)(L). It could also deviate from the guidelines if it found that a party's tax situation resulted in the availability of unanticipated financial resources, or that failing to take the tax situation into account would be unjust or not in a child's best interest. 19-A M.R.S. § 2007(3)(E), (Q). Here the judgment after remand stated that the court was awarding the amount recommended by the guidelines, not deviating from them. In those circumstances, a court may not directly impute income to a party based on the party's general tax situation. Accordingly, the District Court's child support award was based on an incorrect calculation of Charles's gross income, and exceeded the limits of its discretion.