What is Income for Purposes of Calculating Child Support?

If you are in the process of going through a divorce in North Carolina, or considering a divorce in North Carolina and have minor children, you may be curious how the child support calculations are handled. Determining what is income is paramount to these calculations. Make sure that your legal rights are protected by understanding how the term “income” is defined by the courts for child support purposes.

North Carolina will always start with the gross income of a parent in order to calculate child support. The gross income is used in order that a parent may not attempt to manipulate their incomes by adding or subtracting certain payroll deductions before the net income is calculated. In most cases, a W-2 statement will suffice as this will show the gross income for tax purposes for the year for the parent. The following clarifies more what is and is not considered income when a simple W-2 is not available.

The child support guidelines in the state of North Carolina are revised frequently, however, the current definition of gross income is “a parent’s gross income from any source.” This income could come from employment, self-employment, ownership or partnership of a business, rental property, retirement or pension plan money, interest, trusts, annuities, capital gains, workers’ compensation benefits, unemployment insurance benefits, disability benefits, gifts, prizes, and alimony from another party. It is important to note that self-employment income may include any wages, dividends, bonuses, salaries, severance pay, etc. Essentially, the court wants to see every type of income a person has in order to determine what funds are available for the support of the children of the divorce.

If you remarry, the new spouse’s income does not count in the determination of child support. Additionally, if you receive child support from another person with respect to a different child, that child support will also not be counted as income. In most cases, employee benefits such as health and life insurance paid by a company are not considered income. Adoption assistance benefits are also not considered income for purposes of child support calculations. Finally, any income received by a parent that deals with public assistance such as Supplemental Security Income or Food and Nutrition Benefits will not count towards income for the purposes of child support.

In some cases, a parent attempts to “trick” the court system by refusing to work, therefore having no income. While some people are legitimately unemployed, the court will absolutely take that into consideration. However, if a person appears to be purposefully refusing to obtain employment in an attempt to avoid their financial obligation of child support, the court will “impute” income to the parent as a party in the divorce. This means that the court will look at the employment history and previous income, along with the educational background and physical and emotional condition of the parent, and make a determination of what their income “should” be, if they were gainfully employed.

A court will not look favorably on a parent who is attempting to avoid their financial obligations to their child simply by failing to find work in order to “game the system” and avoid paying child support. If a parent also attempts to obtain lower or lesser employment that pays much less than what they could obtain normally, the court may feel that this financial picture is simply not accurate, and again, “impute” income to this parent for child support purposes.

Yes, you may modify child support payments in North Carolina if there has been a substantial change in circumstances. The State of North Carolina presumes that the passage of three years and a change of at least 15% in the child support obligation is a substantial change. However, there can be other substantial changes such as changes in income, or changes in the needs of the child. Courts understand that changes in circumstances do occur, and changes in income also occur and that child support may be adjusted accordingly.

If you are in the process of a divorce, or considering a divorce in the state of North Carolina, you should contact one of our experienced divorce attorneys. We can help you understand your legal rights and help you with your child support calculations with respect to your divorce in the Greater Charlotte region of North Carolina. Contact an experienced divorce attorney at Arnold & Smith, PLLC at 704.370.2828 or online today to schedule your consultation.