In re Marriage of McKenzie

Supreme Court of Iowa · Family Law

Family LawChild SupportModificationchild supportmodificationearning capacityactual earningsvoluntary reduction in income

Facts

Timothy and Dolores's dissolution decree required Timothy to pay $495 per month in child support for their youngest child. Timothy left a job he had held for twenty-two years in Iowa, moved to South Carolina to join Teresa, and later took a lower-paying job there, reducing his annual income to $21,199, while his prior Iowa earning level would have been $45,260. Using Timothy's actual earnings under the guidelines would reduce support to about $205 per month, more than a ten percent decrease from the decree. Timothy sought modification on that basis, while Dolores argued the court should use his earning capacity instead of his actual earnings.

Issue

When a parent voluntarily leaves long-term employment, moves to another state, and accepts lower compensation, may the court use the parent's earning capacity rather than actual earnings to determine child support under the guidelines for purposes of a modification request? More specifically, should earning capacity be used when strict reliance on actual earnings would reduce support, fail to provide for the child's needs, and create a substantial injustice between the parties?

Rule

Although the child support guidelines create a rebuttable presumption that support calculated from actual income is correct, a court may depart from that result when strict application would be unjust or inappropriate and adjustment is necessary to provide for the needs of the child and to do justice between the parties under the special circumstances of the case. In deciding whether to use earning capacity instead of actual earnings, the court may consider whether the parent's reduced ability to earn is self-inflicted or voluntary, and may also consider combined household income in evaluating substantial injustice. If earning capacity is used and the recalculated support does not vary by more than ten percent from the existing order, no substantial change of circumstances exists under Iowa Code section 598.21(9).

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After a divorce in Des Moines, Owen Price was ordered to pay $620 per month in child support. Two years later, he left a ten-year manufacturing job in Iowa paying $52,000, moved to Nashville to live with his new spouse, and accepted a job paying $27,000; applying the guidelines to his actual income would reduce support to $290, while using his prior earning level would yield $600.

If Owen seeks a downward modification based on the more-than-ten-percent drop produced by his actual income, how should the court rule?

Explanation. The majority held that a ten-percent variation based on actual income does not end the analysis because the guideline amount is only a rebuttable presumption. When strict use of actual earnings would be unjust or inappropriate, and an adjustment is necessary to provide for the child's needs and do justice between the parties, the court may use earning capacity instead. A voluntary, self-inflicted reduction in income is a proper consideration, and no specific intent to evade support is required. (Derived from In re Marriage of McKenzie (n.d.).)