Rule 1910.16-2. Support Guidelines. Calculation of Net Income.

 Generally, the amount of support to be awarded is based upon the parties’ monthly net income.

 (a)  Monthly Gross Income. Monthly gross income is ordinarily based upon at least a six-month average of all of a party’s income. The term ‘‘income’’ is defined by the support law, 23 Pa.C.S.A. §  4302, and includes income from any source. The statute lists many types of income including, but not limited to:

   (1)  wages, salaries, bonuses, fees and commissions;

   (2)  net income from business or dealings in property;

   (3)  interest, rents, royalties, and dividends;

   (4)  pensions and all forms of retirement;

   (5)  income from an interest in an estate or trust;

   (6)  Social Security disability benefits, Social Security retirement benefits, temporary and permanent disability benefits, workers’ compensation and unemployment compensation;

   (7)  alimony if, in the discretion of the trier of fact, inclusion of part or all of it is appropriate; and

   Official Note

   Since the reasons for ordering payment of alimony vary, the appropriateness of including it in the recipient’s gross income must also vary. For example, if the obligor is paying $1,000 per month in alimony for the express purpose of financing obligee’s college education, it would be inappropriate to consider that alimony as income from which the obligee could provide child support. However, if alimony is intended to finance the obligee’s general living expenses, inclusion of the alimony as income is appropriate.

   (8)  other entitlements to money or lump sum awards, without regard to source, including lottery winnings, income tax refunds, insurance compensation or settlements; awards and verdicts; and any form of payment due to and collectible by an individual regardless of source.

   Official Note

   The trial court has discretion to determine the most appropriate method for imputing lump-sum awards as income for purposes of establishing or modifying the party’s support obligation. These awards may be annualized or they may be averaged over a shorter or longer period of time depending on the circumstances of the case. They may also be escrowed in an amount sufficient to secure the support obligation during that period of time.

   Income tax refunds should not be included as income to the extent they were already factored into the party’s actual tax obligation for purposes of arriving at his or her net income.

 (b)  Treatment of Public Assistance, SSI Benefits and Social Security Payments to a Child Due to a Parent’s Death, Disability or Retirement.

   (1)  Neither public assistance nor Supplemental Security Income (SSI) benefits shall be counted as income for purposes of determining support.

   (2)  If a child for whom support is sought is receiving Social Security benefits as a result of a parent’s retirement, death or disability, the benefits the child receives shall be added to the combined monthly net incomes of the obligor and the obligee to calculate the income available for support on the vertical axis of the basic child support schedule set forth in Rule 1910.16-3. The presumptive amount of support as set forth on the schedule at the combined income of the obligee, obligor and child’s benefits shall then be reduced by the amount of the child’s benefits before apportioning the remaining support obligation between the parties pursuant to Rule 1910.16-4. For purposes of determining the support obligation of a surviving parent when the child is receiving benefits as the result of the other parent’s death, the income of a non-parent obligee who is caring for a child but has no support obligation to that child shall include only those funds the obligee is receiving on behalf of the child.

  Example 1. If the obligor has net income of $1,200 per month; the obligee has net monthly income of $800; and the child receives Social Security derivative benefits of $300 per month as a result of either the obligor’s or obligee’s retirement or disability, then the total combined monthly net income is $2,300. Using the schedule at Rule 1910.16-3 for one child, the amount of support is $568 per month. From that amount, subtract the amount the child is receiving in Social Security derivative benefits ($568 minus $300 equals $268). Then, apply the formula at Rule 1910.16-4 to apportion the remaining child support amount of $268 between the obligor and the obligee in proportion to their respective incomes. The obligor’s $1,200 net income per month is 60% of the total of the obligor’s and the obligee’s combined net monthly income. Thus, the obligor’s support obligation would be 60% of $268, or $161, per month.

  Example 2. Two children live with Grandmother who receives $400 per month in Social Security death benefits for the children as a result of their father’s death. Grandmother also receives $500 per month from a trust established by Father for the benefit of the children. Grandmother is employed and earns $2,000 net per month. Grandmother seeks support from the children’s mother, who earns $1,500 net per month. For purposes of calculating Mother’s support obligation, Grandmother’s income will be $500, the amount she receives on behalf of the children from the trust. Therefore, the obligee’s and the obligor’s combined net monthly incomes total $2,000. Add to that the $400 in Social Security benefits Grandmother receives for the children to find the basic child support amount in Rule 1910.16-3. The basic support amount at the $2,400 income level for two children is $820. Subtracting from that amount the $400 in Social Security derivative benefits Grandmother receives for the children, results in a basic support amount of $420 to be apportioned between the parties. As Mother’s income is 75% of the parties’ combined income of $2,000, her support obligation to Grandmother is $315 per month.

   Official Note

   Care must be taken to distinguish Social Security from Supplemental Security Income (SSI) benefits. Social Security benefits are income pursuant to subdivision (a) of this rule.

 (c)  Monthly Net Income.

   (1)  Unless otherwise provided in these Rules, the court shall deduct only the following items from monthly gross income to arrive at net income:

       (A)   federal, state, and local income taxes;

       (B)   F.I.C.A. payments and non-voluntary retirement payments;

       (C)   union dues; and

       (D)   alimony paid to the other party.

   (2)  In computing a spousal support or alimony pendente lite obligation, the court shall deduct from the obligor’s monthly net income all of his or her child support obligations and any amounts of spousal support, alimony pendente lite or alimony being paid to former spouses.

 (d)  Reduced or Fluctuating Income.

   (1)  Voluntary Reduction of Income. When either party voluntarily assumes a lower paying job, quits a job, leaves employment, changes occupations or changes employment status to pursue an education, or is fired for cause, there generally will be no effect on the support obligation.

   (2)  Involuntary Reduction of, and Fluctuations in, Income. No adjustments in support payments will be made for normal fluctuations in earnings. However, appropriate adjustments will be made for substantial continuing involuntary decreases in income, including but not limited to the result of illness, lay-off, termination, job elimination or some other employment situation over which the party has no control.

   (3)  Seasonal Employees. Support orders for seasonal employees, such as construction workers, shall ordinarily be based upon a yearly average.

   (4)  Earning Capacity. Ordinarily, either party to a support action who willfully fails to obtain appropriate employment will be considered to have an income equal to the party’s earning capacity. Age, education, training, health, work experience, earnings history and child care responsibilities are factors which shall be considered in determining earning capacity.

 (e)  Net Income Affecting Application of the Child Support Guidelines.

   (1)  Low Income Cases.

       (A)   When the obligor’s monthly net income and corresponding number of children fall into the shaded area of the schedule set forth in Rule 1910.16-3, the basic child support obligation shall be calculated using the obligor’s income only. For example, where the obligor has monthly net income of $850, the presumptive amount of support for three children is $94 per month. This amount is determined directly from the schedule in Rule 1910.16-3.

       (B)   In computing a basic spousal support or alimony pendente lite obligation, the presumptive amount of support shall not reduce the obligor’s net income below $748 per month. For example, if the obligor earns $800 per month and the obligee earns $300 per month, the formula in Part IV of Rule 1910.16-4 would result in a support obligation of $200 per month. Since this amount leaves the obligor with only $600 per month, it must be adjusted so that the obligor retains at least $748 per month. The presumptive minimum amount of spousal support, therefore, is $52 per month in this case.

       (C)   When the obligor’s monthly net income is $748 or less, the court may award support only after consideration of the obligor’s actual living expenses.

   (2)  High Income Child Support Cases. When the parties’ combined net income exceeds $20,000 per month, child support shall be calculated pursuant to Melzer v. Witsberger, 505 Pa. 462, 480 A.2d 991 (1984). The presumptive minimum amount of child support shall be the obligor’s percentage share of the highest amount of support which can be derived from the schedule for the appropriate number of children and using the parties’ actual combined income to determine the obligor’s percentage share of this amount. The court may award an additional amount of child support based on the parties’ combined income and the factors set forth in Melzer. The Melzer analysis in high income child support cases shall be applied to all of the parties’ income, not just to the amount of income exceeding $20,000 per month. In a Melzer analysis case, the presumptive minimum remains applicable.

   For example, where the obligor and the obligee have monthly net incomes of $17,000 and $4,000 respectively, the presumptive minimum amount of child support for three children is calculated as follows: using the formula in Rule 1910.16-4, determine the parties’ percentage shares of income based on their actual combined income—81% and 19% respectively of $21,000. Using the schedule in Rule 1910.16-3, find the highest possible combined child support obligation for three children—$3,018. The obligor’s percentage share of the combined obligation is 81% of $3,018, or $2,445. This is the presumptive minimum amount of child support that he or she must pay for three children. Since this amount is derived from the schedule in Rule 1910.16-3, which is limited to combined household income of $20,000, the court may award an additional amount of support based on the factors set forth in Melzer.

 (f) Dependency Tax Exemption. In order to maximize the total income available to the parties and children, the court may, as justice and fairness require, award the federal child dependency tax exemption to the non-custodial parent, or to either parent in cases of equally shared custody, and order the other party to execute the waiver required by the Internal Revenue Code, 26 U.S.C.A. §  152(e). The tax consequences resulting from an award of the child dependency exemption must be considered in calculating each party’s income available for support.

   Subdivision (a) addresses gross income for purposes of calculating the support obligation by reference to the statutory definition at 23 Pa.C.S.A. §  4322. Subdivision (b) provides for the treatment of public assistance, SSI benefits and Social Security derivative benefits.

   Subdivision (c) sets forth the exclusive list of the deductions that may be taken from gross income in arriving at a party’s net income. When the cost of health insurance premiums is treated as an additional expense subject to allocation between the parties under Rule 1910.16-6, it is not deductible from gross income. However, part or all of the cost of health insurance premiums may be deducted from the obligor’s gross income pursuant to Rule 1910.16-6(b) in cases in which the obligor is paying the premiums and the obligee has no income or minimal income. Subdivision (c) relates to awards of spousal support or alimony pendente lite when there are multiple families. In these cases, a party’s net income must be reduced to account for his or her child support obligations, as well as any pre-existing spousal support, alimony pendente lite or alimony obligations being paid to former spouses who are not the subject of the support action.

   Subdivision (d) has been amended to clarify the distinction between voluntary and involuntary changes in income. Since the payment of support is a priority, subsection (1) reflects current case law which, for example, holds that a party’s decision to forego current employment in order to further his or her education should be treated no differently than a decision to change jobs or occupations which results in a lower income. Kersey v. Jefferson, 791 A.2d 419 (Pa. Super. Ct. 2002); Grimes v. Grimes, 596 A.2d 240 (Pa. Super. Ct. 1991).

   Subdivision (e) has been amended to reflect the updated schedule in Rule 1910.16-3 and the increase in the Self-Support Reserve (‘‘SSR’’), formerly referred to as the Computed Allowance Minimum (‘‘CAM’’). The schedule now applies to all cases in which the parties’ combined net monthly income is $20,000 or less. The upper income limit of the prior schedule was only $15,000. The amount of support at each income level of the schedule also has changed, so the examples in Rule 1910.16-2 were revised to be consistent with the new support amounts.

   The SSR is intended to assure that obligors with low incomes retain sufficient income to meet their basic needs and to maintain the incentive to continue employment. When the obligor’s net monthly income or earning capacity falls into the shaded area of the schedule, the basic child support obligation can be derived directly from the schedule in Rule 1910.16-3. There is no need to use the formula in Rule 1910.16-4 to calculate the obligor’s support obligation because the SSR keeps the amount of the obligation the same regardless of the obligee’s income. The obligee’s income may be a relevant factor, however, in determining whether to deviate from the basic guideline obligation pursuant to Rule 1910.16-5 and in considering whether to require the obligor to contribute to any additional expenses under Rule 1910.16-6.

   Since the schedule in Rule 1910.16-3 sets forth basic child support only, subdivision (e)(1)(B) is necessary to reflect the operation of the SSR in spousal support and alimony pendente lite cases. It adjusts the basic guideline obligation, which would otherwise be calculated under the formula in Rule 1910.16-4, so that the obligor’s income does not fall below the SSR amount in these cases.

   Previously, the CAM required that the obligor retain at least $550 per month. The SSR now requires that the obligor retain income of at least $748 per month, an amount equal to the 2003 federal poverty level for one person. When the obligor’s monthly net income is less than $748, subsection (e)(1)(C) provides that the court must consider the parties’ actual living expenses before awarding support. The guidelines assume that at this income level the obligor is barely able to meet basic personal needs. In these cases, therefore, entry of a minimal order may be appropriate. In some cases, it may not be appropriate to order support at all.

   The schedule at Rule 1910.16-3 sets forth the presumptive amount of basic child support to be awarded. If the circumstances warrant, the court may deviate from that amount under Rule 1910.16-5 and may also consider a party’s contribution to additional expenses, which are typically added to the basic amount of support under Rule 1910.16-6. If, for example, the obligor earns only $800 per month but is living with his or her parents, or has remarried and is living with a fully-employed spouse, the court may consider an upward deviation under Rule 1910.16-5(b)(3) and/or may order the party to contribute to the additional expenses under Rule 1910.16-6. Consistent with the goals of the SSR, however, the court should ensure that the overall support obligation leaves the obligor with sufficient income to meet basic personal needs and to maintain the incentive to continue working so that support can be paid.

   Subdivision (e) also reflects the limited application of Melzer v. Witsberger, 505 Pa. 462, 480 A.2d 991 (1984), to cases in which the guidelines cannot be used to establish the child support obligation because the parties’ combined income exceeds $20,000 per month. The court must establish a presumptive minimum amount of child support using the guidelines to arrive at that amount. The formula for calculating the presumptive minimum amount provides that the parties’ percentage shares should be calculated using their actual combined income rather than the theoretical combined income of only $20,000. In considering whether to award an additional amount of child support, the court must apply the factors set forth in Melzer to all of the parties’ combined income, not just the amount over $20,000 per month. It would be improper to apply the formula in Rule 1910.16-4 to the amount of the parties’ combined income which exceeds $20,000 per month and award the obligor’s percentage share as additional support. Additional support, if any, may be more or less than the percentage share and must be determined, therefore, in accordance with the factors set forth in Melzer. The presumptive minimum shall apply even if the Melzer analysis results in a lower amount.

   The provisions of this Rule 1910.16-2 adopted September 29, 1989, effective September 30, 1989, 19 Pa.B. 4151; rescinded and replaced January 27, 1993, effective immediately, 23 Pa.B. 701; amended December 7, 1998, effective April 1, 1999, 28 Pa.B. 6162; amended October 27, 2000, effective immediately, 30 Pa.B. 5837; amended October 30, 2001, effective immediately, 31 Pa.B. 6273; amended November 9, 2004, effective immediately, 34 Pa.B. 6315; amended September 27, 2005, effective four months from date of this order, 35 Pa.B. 5643. Immediately preceding text appears at serial pages (308227) to (308231) and (308233).