Grossing Up Income
A lot of employees of the World Bank and International Monetary Fund reside in the Maryland suburbs of DC and do not pay US Taxes on the income they earn. So someone making $100,000 a year tax free nets about the same amount of money as a US taxpayer who makes $130,000.
Since child support is based on income, it is a natural thought process, if you represent the recipient, to try to gross up tax free income. And in fact, that was a common practice in Montgomery County Maryland until the Lemley case in 1994, when the Maryland Court of Special Appeals said:
“By ‘grossing-up’ Mr. Lemley’s tax-free pension, the Circuit Court of Montgomery County undoubtedly intended to place him on equal footing with the many parents who pay taxes on their income. In a broad sense, that strikes us as a reasonable approach. The devil, of course, is in the details, and wrestling with those details is a job best left to the legislature rather than the courts. The award of child support is reversed and remanded for an award based on the actual dollar amount of Mr. Lemley’s disability pension.” Lemley v. Lemley, 102 Md. App. 266, 292 (Md. Ct. Spec. App. 1994)