If you’re the mother or father of a minor but no longer live with your co-parent, you are likely aware that Pennsylvania child support determinations are usually made by based on each parent’s income. Frequently referred to as the "income shares model,” the total income of both parents is calculated, and the share of each parent’s child support responsibility generally conforms to the percentage of the total income that they provide, with a few adjustments. 

While this might seem to be a fairly simple formula, serious disagreements can arise regarding what specifically counts as income. Parents often accuse their partners of attempting to manipulate the child support calculation by earning money “off the books” or collecting non-monetary benefits that won’t show up in an income shares analysis. 

The Pennsylvania Superior Court recently addressed an issue of this type in Hall v. Bartron. This case was brought by a mother who believed that her child’s father tried to reduce his child support obligation by reinvesting profits from a corporation he owned back into the company rather than taking the income for himself. He also received rental payments and personal benefits through the business. In order to increase the child support she would receive, the mother sought to include these financial streams as part of the father’s income.  

These disputes are often very fact-specific. While there is a potential that someone will use a corporation they control as a means of child support avoidance, the Superior Court held here that the trial court did not abuse its discretion when it excluded the corporation’s profits from the Father’s net monthly income. The court determined that the profits were retained within the corporation for legitimate business purposes rather than nefarious personal reasons. Similarly, the proceeds of the rental payments were deemed necessary to sustain the corporation’s operations. Accordingly, this was not considered as an effort to hide the father’s true income.

However, the Superior Court found that the trial court erred by failing to include the value of personal perquisites the father received from the corporation, such as personal use of company vehicles and other non-cash benefits. These benefits should be treated as income because they provide a clear economic benefit, enabling the father to reduce his personal expenses.

This decision underscores the importance of scrutinizing all potential income sources in child support cases, including corporate benefits and perquisites. Parents involved in child support disputes should retain an attorney who is highly knowledgeable regarding the various forms of income that should be considered when calculating each party’s obligation.

Chan & Associates handles child support proceedings for Pennsylvania parents, including enforcement and modification proceedings. For a consultation, please call 717-869-0015 or contact me online. My office is in Lancaster.