This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. 480A.08, subd. 3 (2000).






In Re the Marriage of:

Lori Linn Sandstrom,

f/k/a Lori Linn Bullock, petitioner,





Thomas Leamon Bullock,



Filed August 14, 2001


Randall, Judge


Hennepin County District Court

File No. 218310


David D. Himlie, 325 Southdale Place, 3400 West 66th Street, Edina, MN 55435 (for appellant)


Thomas Leamon Bullock, 1735 Canary Lane, Mound, MN 55364 (pro se respondent)


Considered and decided by Toussaint, Presiding Judge, Randall, Judge, and Harten, Judge.


R. A. RANDALL, Judge

Appellant argues that the district court erred by declining to consider the money respondent received from his 1999 federal income tax refund and withdrawal of his 401k when calculating respondent's net-monthly income for child support purposes. Because the district court did not err in calculating respondent's net-monthly income, we affirm.


Appellant Lori Sandstrom and respondent Thomas Bullock dissolved their marriage in March 1996, and Bullock was ordered to pay $1,100 per month in child support for the parties' two children. Bullock moved to reduce his support in July 1997. In an order dated September 29, 1997, the district court found that Bullock's net-monthly income was $2,593.46 and ordered Bullock's support obligation to be reduced to $778 per month, which was increased to $829 in March 2000 because of a cost of living adjustment. In May 2000, Bullock again moved to reduce his child support obligation. The child support magistrate found that Bullock had a substantial change in circumstances that rendered his existing obligation unreasonable and unfair. The magistrate found that Bullock's net-monthly income was $1,683, and that applying the child support guidelines to this figure would result in a child support obligation that was at least 20% and $50 per month lower than what Bullock was paying at the time. As a result, the magistrate set Bullock's child support obligation at $505 per month.

Sandstrom then moved the district court to review the magistrate's decision, and the court approved the magistrate's decision in its entirety. Sandstrom now appeals from this order.


Sandstrom incorrectly challenges the child support magistrate's decision to modify Bullock's child support obligation. A party may move for review of a magistrate's decision to either the district court or the magistrate who issued the original decision. Minn. R. Gen. Pract. 372.01. In this case, Sandstrom moved for review of the magistrate's decision by the district court. Thus, this court reviews the district court's decision rather than the magistrate's decision. See Minn. R. Gen. Pract. 374.01 (stating party may appeal order that determines motion for review under rule 372 to this court).

The district court has broad discretion to modify a child support obligation. Moylan v. Moylan, 384 N.W.2d 859, 864 (Minn. 1986). A reviewing court will not reverse the district court's child support decision unless it was an abuse of discretion. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). But, determining whether a particular source of funds is income for child support purposes is a question of law, which this court reviews de novo. Sherburne Cty. Soc. Servs. v. Riedle, 481 N.W.2d 111, 112 (Minn. App. 1992).

The premise of Sandstrom's argument is that Bullock's federal income tax refund and his 401k withdrawal are income for the purpose of calculating Bullock's ability to pay child support. The magistrate did not determine whether these funds were income; instead he declined to include the funds when calculating Bullock's child support obligation. The district court approved the magistrate's decision without change, thereby adopting the magistrate's findings in their entirety as the court's own. Because the court's order is silent on whether the funds classified as income, it is inferred that the court found the funds were not income.

A. 1999 Tax Refund

As part of declining to include Bullock's 1999 tax refund when calculating his net-monthly income, the district court noted that Bullock is now working for a different employer after being involuntary terminated in November 1999 and is making less money.

The court establishes an obligor's child support obligation by calculating the obligor's net-monthly income and multiplying that figure by the percentages indicated by the child support guidelines. Minn. Stat. 518.551, subd. 5(b) (2000). To arrive at net-monthly income, federal and state income taxes, among other deductions itemized in the statute, are deducted from the obligor's total income. Minn. Stat.  518.551, subd. 5(b). Net-monthly income is based on money "available to the [obligor]." Dinwiddie v. Dinwiddie, 379 N.W.2d 227, 229 (Minn. App. 1985) (emphasis in original).

We conclude that the tax refund was already considered when Bullock's child support was set in the September 29 order. The statute recommends using the standard deductions as outlined in the tax table to calculate federal and state income tax withholdings for child support purposes. Minn. Stat. 518.551, subd. 5(b). Under this approach, the court determines the obligor's allowable number of exemptions and estimates the obligor's tax obligation based on the tax table. The tax obligation, along with other allowable deductions, is subtracted from the obligor's total monthly income, which yields the obligor's net-monthly income. If the obligor claims a lower number of exemptions on his W-2 than he is allowed to claim on his tax return, the refund generated from the larger amount withheld from each paycheck would have been already included as income. If the court also included the refund as income after it was received, the court could have created an artificially high income, not accurately reflecting the obligor's real income.

The record demonstrates that, when Bullock's child support obligation was set in the September 29 order, the district court calculated his net-monthly income by subtracting the standard deductions outlined in the tax table from his total monthly income, as the statute instructs. The court used two exemptions, the maximum number permitted because Bullock was allowed to claim himself and one child. According to Bullock's 1999 tax return, he claimed two exemptions and received a refund of approximately $3,100. When Bullock's child support obligation originally was set, the $3,100 was accounted for because the support obligation was calculated using two exemptions. This means that the net-monthly income calculated by the court for child support purposes was higher than what Bullock actually received each month. If the district court considered the tax refund when it calculated Bullock's net-monthly income for purposes of child support modification, essentially, the court would have been considering the income for a second time.

The obvious has to be noted. It is true that a tax refund is "cash" to the person receiving it and, therefore, could be called "income" without doing an injustice to the word, but the analysis does not stop there. However, an income tax refund by its nature is dependent on several circumstances that do not include how much you make. The taxpayer's deductible expenses, of which the possibilities are multitudinous and can change sharply from year to year, including, but not limited to, legitimate business and travel expenses, charitable contributions, unreimbursed casualty losses, investment losses, etc., means a court cannot assume a possible tax refund (unlike a regular paycheck) will be approximately the same every year. One permissible way to handle refunds, if there is a claim that the obligor deliberately has his employer overwithhold is to state that if there is an income tax refund, a percentage of that goes to the obligee for child support, and if there is none, it is a moot issue. This avoids the problem of adding in, as here, $3,100 to respondent's net and then basing monthly child support on that because then the amount would be based on the faulty premise that every year the obligor's net is $3,100 more than the paychecks show.

B. 401k Withdrawal

Bullock received a one-time payment when he cashed out his 401k. Based on the statutory definition of income, this lump sum does not qualify as a periodic payment, and thus is not considered income for child support purposes. See Minn. Stat. 518.54, subd. 6 (2000) (stating income is any periodic payment to individual).

In addition to income, the district court must also consider the parties' earnings and resources, including all real and personal property, when modifying child support or deviating from the guidelines. Minn. Stat. 518.551, subd. 5(c). But, "[t]he exact parameters of what may or may not be used to satisfy or set a support obligation have not been fully determined." Darcy v. Darcy, 455 N.W.2d 518, 521 (Minn. App. 1990).

Bullock is entitled to have a reasonable amount for a pension plan deducted from his total monthly income before calculating child support. See Minn. Stat. 518.551, subd. 5(b) (including reasonable pension deductions as part of list of factors that can be subtracted from obligor's total monthly income). Just because Bullock chose to cash out his 401k, does not lead to the conclusion that district courts must consider 401k withdrawals as part of an obligor's "earnings." The court did not consider the 401k withdrawal when calculating Bullock's net income. In addition, the court determined that Bullock used the money so that he could try to stay current with his bills. Sandstrom does not dispute the court's finding that Bullock used the money for this purpose. Bullock was involuntarily terminated and then found a job that paid him less money than his previous position. These facts provide a reasonable basis for the court's finding. See Bollenbach v. Bollenbach, 285 Minn. 418, 426, 175 N.W.2d 148, 154 (1970) (stating reviewing court will affirm district court's exercise of discretion if court's decision has acceptable basis in fact and principle).