How Income is Used for Wisconsin Child Support

Introduction

In Wisconsin, child support is calculated primarily by a parent’s income. Whether child support arises from a divorce action, paternity/custody action, or a post-judgement modification, the courts and child support agencies must determine a parent’s income before applying the state’s relevant child support standards. While this sounds straightforward, disputes often arise over what counts as income, how that income is calculated, and when income may be imputed to a parent who is unemployed or underemployed.  

This article helps explain how income is used in Wisconsin child support cases, the statutory and administrative framework governing income determination, and common issues that may arise in litigation.

Legal Framework Governing Child Support Income

Wisconsin Child support is governed by a combination of statutes and administrative rules. The primary statute authorizing child support is Wisconsin Statute 767.511, which directs courts to order child support in accordance with the percentage standards established by the Department of Children and Families (DCF), unless a deviation is justified.  

The percentage standards and definitions themselves are set in Wisconsin Admin Code, Chapter DCF 150. This Chapter defines income, explains how income is calculated, and outlines special rules for shared placement, variable incomes, and imputed income.

Together, these provisions create a structured but flexible framework intended to ensure that child support reflects a parent’s actual ability to pay while serving the best interests of the minor child or children.

Definition of Income for Child Support Purposes

Under Wisconsin Admin Code DCF 150.02(13), the Court looks at “gross income” of the parties, not take-home pay. Taxes, health insurance premiums, retirement contributions, and other deductions are generally not subtracted when determining income for child support purposes. Individuals subject to a child support order may mistake their net monthly earnings, which are lower than their gross monthly earnings.  

Gross income is broadly defined as:

• Salary and wages, including overtime, bonuses, commissions, tips, and self-employed income,  
• Interest and investment income,
• Unemployment insurance benefits,
• Worker’s compensation benefits or proceeds from a personal injury award are intended to replace income,
• Disability insurance benefits,
• Pension, annuity, retirement income,  

The definition is intentionally expansive. Courts in Wisconsin consistently emphasize that child support should be based on a parent's actual earning capacity and financial resources.  

Determining Income for Salaried and Hourly Employees

The Courts will often want documentation regarding a party’s income. The Courts will not often solely rely on a party’s verbal assertion for their income. For parties with traditional employment, income is typically determined by reviewing relevant income information, such as:

• Recently, pay stubs,
• Year-to-date earnings, such as W-2 tax forms,
• Prior tax returns, and/or
• Employment contracts or offer letters.

Courts often annualize income based on year-to-date earnings, especially when a parent’s pay fluctuates due to overtime or bonuses. If a parent believes that their most recent pay stub does not accurately reflect their average earnings, it is important to provide additional information to support their position.  

Self-Employment and Business Income

Determining an individual’s income who is hourly or salaried is easier compared to an individual who is self-employed or otherwise has some sort of “business income”. Self-employed parents present unique challenges when determining income for support purposes. Under Wisconsin Admin Code DCF 150.02(14), self-employment income is calculated by taking gross receipts and subtracting ordinary and necessary business expenses.  

Courts scrutinize claimed expenses closely. Expenses that reduce taxable income for IRS purposes are not automatically accepted for child support purposes. Personal expenses disguised as business deductions may be added back into the individual’s gross monthly income for purposes of determining child support. Common examples of personal expenses disguised as business deductions would be:

• Vehicle expenses,  
• Meals,  
• Cellphone or other utilities,
• Insurance premium costs.

Courts are often aware that individuals may rightfully reduce their taxable income for purposes of the IRS. As a hypothetical, the self-employed individual may report $120,000 in gross receipts but also claims $90,000 in expenses, resulting in only $30,000 of “income.” However, the self-employed individual would need to provide itemized costs for what the $90,000 in expenses includes. A Wisconsin Court may find that some of these expenses are not “ordinary and necessary” and add them back into the self-employed individual’s gross income when calculating child support.  

Variable and Seasonal Income

When a party’s income fluctuates significantly, the Courts may average the income over time. Wisconsin Admin Code DCF 150.03(2) allows the use of historical income to arrive at a fair and representative figure. This approach is common for parents who earn commissions, bonuses, or have seasonal income.  

As a hypothetical, if a parent works in sales and earns commissions that vary from month to month, the Court may look at multiple years of his income to determine the average. Rather than relying on a single high-earning or single low-earning year, the Court may average the individual’s income over several years to determine a reasonable annual income for child support purposes.  

Imputed Income and Earning Capacity

When a parent is unemployed or underemployed, courts may impute income based on earning capacity. This authority is derived from Wisconsin Statute 767.511(1m) and Wisconsin Admin. Code DCF 150.03(3).  

Income may be imputed when unemployment or underemployment is voluntary and unreasonable. The Court can consider factors such as:

• Recent work experience,
• Earnings during previous periods of employment,
• Job skills and training,
• Education,
• Vocational evaluation,
• If a parent is the caretaker of a child related to both parties, the relationship between the parents’ earning capacity and the child care costs that would be incurred if the parent obtained employment,

The Courts are skeptical of unemployed or underemployed individuals when calculating child support. The Courts are aware that individuals often intentionally reduce their gross income to obtain a lower child support order.  That is why the Court often imputes income to individuals. If there is a legitimate reduction in an individual’s income, this must be demonstrated to the Court sufficiently.  

As a hypothetical, if a parent previously earned $80,000 per year as a registered nurse, and then after separation, she voluntarily leaves full-time employment to work part-time, earning $30,000 per year without justification, the Court may impute income to the parent based on their prior earning capacity and calculate support as though they were still earning $80,000 per year.  

Shared Placement and Income Calculations

When parents share physical placement of a child, with each parent getting at least 25% of the time, Wisconsin Admin Code DCF 150.04 applies. Under the shared placement formula, both parents’ incomes are used to calculate child support. The formula considers:

• Each parent’s gross income,
• The percentage of overnights with each parent, and  
• The costs of maintaining two households for the child.

Accurate income determination is especially critical in shared placement cases because even small income differences can significantly affect the support obligation.  

Deviating From the Percentage Standards

Although income drives child support, Wisconsin Courts may deviate from the percentage standards under Wisconsin Statute 767.511(1n) if applying them would be unfair to the child or either parent. Relevant deviation factors include:

• Financial resources of the child,
• The needs of each parent,
• Earning capacity of each parent,
• Maintenance obligations,
• Extraordinary educational or medical expenses.

Income is still the starting point, but deviation allows courts to tailor support orders to unique circumstances.  

Conclusion

Income is the foundation of child support determinations in Wisconsin. By broadly defining income and emphasizing earning capacity, Wisconsin law seeks to ensure that child support orders fairly reflect a parent’s true financial ability. Understanding how income is calculated and how it can be challenged is essential for litigants and practitioners navigating Wisconsin child support cases. Any child support matters involving a self-employed individual also take special considerations.  

Contact O’Flaherty Law today to schedule a consultation. Let us guide you through the process with clear advice and trusted support.