Child Support And Parents With Multiple Income Sources

If you are a parent with multiple sources of income and are trying to figure out which sources of income will be used to determine child support payments, you’re not alone.

Knowing how your child support payments will be calculated is important to understand up front. You’ll want to prepare yourself ahead of time and don’t want to be blindsided by your ex’s attorney or the court.

The short answer to the question of “which sources of my income are subject to child support payments?” is: all of them, with very few exceptions.
 

Calculating Net Monthly Income

Net monthly income is gross monthly income minus necessary deductions like taxes. If parents are employed, their income for the purpose of child support includes, but is not limited to:

• Salaries
• Wages
• Commissions
• Royalties
• Overtime
• Bonuses
• Pensions
• Disability insurance benefits
• Workers’ compensation insurance benefits
• Unemployment insurance benefits
• Spousal support from a different relationship

Each Parents’ Level of Responsibility

The child support calculator considers the following factors when calculating the amount each parent should pay:

• Each parents’ mutual responsibility for supporting their children
• Each parents’ income and level of responsibility for the children
• Each parents’ ability to pay
• Each parents’ standard of living as it affects the children’s quality of life

 

Business Income

Courts are well familiar with the tactic of rolling personal expenses into a business to reduce net income. Income from a business includes gross receipts minus operating expenses. The court will place a value on income disguised as business losses and benefits, and this will be included in the parent’s income.

Some parents’ living expenses are reduced by benefits provided by their employer, such as housing, meal allowances, and a vehicle. These benefits can be equated to income for the purpose of child support.
 

Income from Other Sources

There aren’t many exceptions to the rule that money coming in counts as income for the purpose of child support. Even gambling winnings and settlements from personal injury lawsuits can be included.

Under some circumstances, gifts and inheritances are not considered income, but interest on them is. This is true even if the parent isn’t even receiving the interest. If the parent has a large sum of money that could earn significant interest if invested, that earning potential may be considered income even if it hasn’t generated actual income.
 

Low Income Parents

The court looks at a parent’s earning potential in making a determination of income for the purpose of child support. This prevents a parent from shirking child support responsibilities by simply avoiding earning money.

While there are plenty of situations where a parent either is legitimately unable to work or unable to find employment, or where it is in the best interest of the children for the parent to stay home, many low income parents have the potential to earn more than they do.

To determine whether a parent is purposefully unemployed or underemployed, the court looks to the parent’s employment history. If the parent previously held a job that brought in a certain amount of income, the court will examine why this able-bodied parent now earns far less or nothing at all. If the parent cannot justify this, the court will count the parent’s earning potential as actual income.

Calculating income for the purpose of child support is complicated, and the assistance of experienced legal counsel can be particularly powerful here. An attorney can take an educated and creative approach to determining an amount that is fair and equitable to all parties.