Written By: John C. Belt
Arizona Child Support Attorney
It is well-known that military members receive generous benefits for their service. It is important to understand and value these benefits when calculating child support.
A military member’s pay is broken down into “base pay” and allowances, such as a housing allowance and a food allowance. It is settled law that the military member’s gross pay for purposes of calculating child support must include these various allowances.
The base pay is taxable, but the allowances are not. Therefore, the military member’s “net” paycheck is significantly greater than any other person making the same gross income. This employment benefit is a well-known fact among military members. In fact, the U.S. Air Force lists this benefit right on its website. The Benefits Fact Sheet Number 3 states “Tax savings can be significant as BAS and housing allowances average over 30% of a member’s total paychecks. In addition to being exempt from Federal and State links you to an online calculator to calculate the individual member’s actual tax savings.
The Arizona Child Support Guidelines direct that, in determining gross income, “Expense reimbursements or benefits received by a parent in the course of employment or self-employment or operation of a business shall be counted as income if they are significant and reduce personal living expenses.” A military member’s “benefit” of having his income tax burden reduced arguably fits this definition.
Sometimes, the military member receives free housing rather than the housing allowance. A 2011 Arizona case made it clear that the court must include an amount which represents a fair value for the free housing should be added to the member’s gross pay. While the housing allowance that is given to other members at that base might be a fair value, it is also possible that the particular house given to the member has an even greater value.
Another recent Arizona case, recognized that an employer’s contributions to an employees retirement plan and to other benefits such as health-insurance premiums could be included as gross-income for child support purposes. Paragraph 17 of the Facts Benefit Sheet states, “One of the most attractive incentives of a military career is retirement, which provides a monthly retirement income for those who serve a minimum of twenty years. Your retirement represents a considerable value over your life expectancy. While many civilian employees must contribute to their retirement, yours is provided at no cost to you.” A fair value for this employer-provided benefit must be calculated and added to the military member’s income. For example, the Arizona State Retirement System pension plan requires Arizona government employees to contribute 9.6% of their own gross pay towards their own retirement.
Finally, a military member receives health insurance for he and his family free of charge, and he receives dental and vision insurance for himself free of charge. Just as importantly, the military member never pays a co-pay or deductible. A fair value for this benefit should be added to the military member’s pay when calculating child support. One survey states that the average annual cost of premiums for a single person is $5,049, and the average annual cost of premiums for a family is $13,770. Another survey, which profiled 552 of the nation’s largest employers, stated the gross healthcare expenditures for those companies’ health plans will be over $10,000 for 2010.
The U.S. Air Force’s Benefits Fact sheet lists a total thirty-three benefits, not including the intangible benefits it lists. In addition to the three benefits listed above, there are several other benefits which are easily quantifiable and which benefit a military member. A parent needs to be able to demonstrate to the judge the fair monetary value for each of the benefits that he or she is seeking to have added to the military member’s income.