Income - Overseas COLAs & Allowances

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“Gross income” includes "Expense reimbursements or in-kind payments received by a parent in the course of employment... if they are significant and reduce personal living expenses.” C.R.S. 14-10-115(5)(I)(X).

Employer Housing & Locality Allowances

It is well-established that regular housing allowances paid by an employer count as income, even if such allowances are not cash, but “in-kind”, i.e.. the employer provides the housing for an employee. See, for example, In re: Marriage of Long, 921 P.2d 67 (Colo.App. 1996) where a military member living in government housing was imputed the value of that housing at the BAH rate.

Some employers vary the pay of their employees depending upon where they are located. The federal government is the largest example of this, both with civilian employees (where the GS pay scale has locality adjustments), as well as with military personnel, which has a Basic Allowance for Housing which varies, depending upon the member’s duty station.

An example of different pays based upon location is that in 2019, a married Army Colonel stationed at Fort Polk, Louisiana received BAH of $1701, whereas that same Colonel stationed in Honolulu, Hawaii would receive a whopping $5508 BAH.

If that San Francisco Colonel had a pending Colorado support case, the court would count as income the extra $3800 the military considered was necessary to put him in the same financial position as a Colonel at Fort Polk. That would result in higher child support, and if maintenance were at issue, perhaps losing about 40% of the extra BAH to maintenance & support combined.

Foreign & Overseas COLAs

The same principle applies to overseas payments. When an employer sends someone to a foreign country where the cost of living is higher, in addition to salary is it not unusual for the employee to receive allowances intended to help defray those higher costs.

Such allowances may be known as Cost of Living Allowances (COLAs), Overseas Housing Allowances, tax equalization payments, etc. Their purpose is to try to put the employee on level footing as his/her peers living in the United States.

Again, unfortunately for the employee, such allowances also count as income for purposes of maintenance and child support. The father’s employer in In re: Marriage of Stress, 939 P.2d 500 (Colo. App. 1997), transferred him to Canada, where upon he received a foreign service premium, a commodities and services allowance to offset the higher cost of living in Canada, and his employer paid his Canadian income taxes with an “expatriate tax equalization”.

The father argued that these thousands of additional dollars per month did not result in any higher net income, as they simply covered a higher cost of living. The Colorado Court of Appeals was not impressed, finding that the only exceptions to counting a source of income as “gross income” under C.R.S. 14-10-115 were those exceptions specifically enumerated in the statute.

And the father did not satisfy those exceptions: “We perceive no basis under the statute upon which the trial court could exclude from father's gross income the monies paid directly to him to compensate for the cost of living in a foreign locale. Such monies serve the same function as the balance of father's compensation, that is, to fund his chosen lifestyle and financial obligations in the geographic area in which he resides.” Id. at 502.

Recipient Living in Foreign Country

There is one situation where a court has recognized that the location of a parent may have an impact on how much support should be paid. In People ex rel. A.K., 72 P.3d 402 (Colo.App. 2003), the mother and children had moved to Russia, and then applied for child support in Colorado, where the father lived.

The mother’s income was $77/mo, a pittance by American standards, but in line with Russian salaries. The Father’s obligation per the Child Support Guidelines was $1412/mo, and Father argued that amount would be outrageously high by Russian standards, as the children needed a much lower amount of support to have a comparable standard of living. The trial court rejected the father’s request for a downward deviation from the guidelines.

The Court of Appeals held the door open a little to consider the cost of living issue, but only if proper evidence were presented:

"In declining to depart from the guidelines, the trial court found that the evidence presented did not support a conclusion that economic circumstances in Russia were so dissimilar to those in Colorado that reliance on the guidelines would be unreasonable or unfair. The evidence relating to the economic needs of the children came from the parties and the testimony of a witness testifying by telephone from Russia. Father had identified an expert on the political and economic situation in Russia, but he was not available at the time of the hearing. Given the complexity of comparing the economic circumstance in Colorado to those in Russia, expert testimony would have been useful.

Given the difficulty in applying Colorado child support guidelines to the needs of children in Russia, we conclude that the trial court should have considered the evidence referenced above in deciding whether application of the guidelines ‘would be inequitable, unjust, or inappropriate.’"

While the Court of Appeals did not explicitly hold that a deviation was appropriate, it did remand the case back to the trial court to consider evidence as to whether Russia’s lower cost of living warranted a deviation from the Colorado Child Support Guidelines.

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