Opinion
No. 4-732 / 04-0866
Filed December 22, 2004
Appeal from the Iowa District Court for Dubuque County, Monica L. Ackley, Judge.
Respondent appeals from the district court's order following an Iowa Code chapter 252H (2003) review of an action filed by the Child Support Recovery Unit. AFFIRMED.
Mary Beth Fleming of Kane, Norby Ruddick, P.C., Dubuque, for respondent-appellant.
Thomas Bitter of Bitter Law Offices, Dubuque, for petitioner-appellee.
Thomas J. Miller, Attorney General, Martha Boesen, Assistant Attorney General, Michael Parker and Christian Smith, Child Support Recovery Unit, Davenport, for appellee-State.
Considered by Vogel, P.J., and Miller and Eisenhauer, JJ.
Timothy Eubanks appeals from the district court's order following an Iowa Code chapter 252H (2003) review of an action filed by the Child Support Recovery Unit (CSRU) at the request of Lisa Eubanks. He contends the district court erred in calculating his salary for child support payments under the child support guidelines. Because this administrative review is an equitable original proceeding, Iowa Code § 252H.8(7), we review his claim de novo. State ex. rel. Heidick v. Balch, 533 N.W.2d 209, 211 (Iowa 1995).
Timothy and Lisa were divorced in 1992. They have two minor children. Timothy was ordered to pay child support pursuant to the child support guidelines. In February 2001, Timothy's child support obligation was modified following a chapter 252H review hearing. He was ordered to pay $38 per month in support.
In February 2004, the CSRU filed a request for a hearing for modification of child support with an attached notice of intent to review the child support obligation. A hearing was held in March 2004. Timothy provided a W-2 form showing an income of $3829.00 for 2003, which included a salary of $2000.00, $1118.00 in business income, and $711.00 as S corporation income. Timothy earned this income through C T Trucking, Inc. (C T), a company he owns jointly with his fiancée. C T showed earnings of $89,178.00 with operating expenses of $87,760.96.
The district court determined the earnings of C T were attributable to Timothy. The court deducted from the earnings $46,000.00 for fuel expenses, $1500.00 in dues, and $5335.00 in meal expenses. The court thereby imputed to Timothy an income of $36,165.00 per year. Lisa earns approximately $10,712.00 per year. Accordingly, the court ordered Timothy's child support payments increased to $721.77 per month.
Timothy filed a motion to enlarge filings pursuant to Iowa Rule of Civil Procedure 1.904(2). The court granted Timothy's request to grant him a deduction for medical insurance and a qualified dependant deduction, reducing his child support obligation to $682.15 per month. The court denied Timothy's request to reconsider his gross earnings as a co-owner in his trucking business.
Timothy appeals, contending the district court erred in imputing C T's earnings to him, and in failing to take into account deductions for corporate operating expenses when calculating his income.
Before the court can apply the child support guidelines, it needs to determine the net monthly income of the custodial and non-custodial parent. In re Marriage of McKamey, 522 N.W.2d 95, 98 (Iowa Ct.App. 1994). Although determining the net monthly income of self-employed persons can be difficult, it is not sufficient justification for failing to make the computation. Id. Generally in fixing child support, we consider as gross income what is referred to as "total taxable" income on the Federal 1040 and as "net income" on the IA 1040. Id. However, the court may employ other methods of computing net monthly income. See id. (affirming the trial court's decision to exclude business deductions for depreciation and instead increasing non-custodial parent's income computation by the amounts the trial court determined were taken from the business for personal use but claimed as expenses on tax returns). For instance, a trial court may in its discretion consider the parties' net worth as a permissible factor in setting or modifying child support. State ex. rel. Pfister v. Larson, 569 N.W.2d 512, 515 (Iowa Ct.App. 1997) (overruled on other grounds by In re Marriage of Belger, 654 N.W.2d 902 (Iowa 2002)).
The district court made a finding Timothy's tax returns do not accurately reflect his income. The court found the expenses listed for C T to be "less than credible." In its order denying Timothy's request to reconsider his gross earnings, the court expounded:
[I]f [Timothy] was gainfully employed by a trucking company, he would be capable of making a decent living at the rate attributed to him by the court. He is using his business deductions to minimize his income for tax filing purposes, and the court does not agree that all of the deductions are appropriate for a determination of his child support obligation.
We concur with the district court's assessment. The income figures provided by Timothy do not appear to accurately reflect his earning level. Using an income of $36,165.00 per year is appropriate under these circumstances. Accordingly, we affirm the district court's order setting Timothy's child support obligation at $682.15 per month.