Learn More>>Child Support>>Identifying Gross Income

Gross income of each parent shall be determined in the process of setting the presumptive amount of child support and shall include all income from any source, before deductions for taxes and other deductions such as preexisting orders for child support and credits for other qualified children, whether earned or unearned, and includes, but is not limited to, the following: salaries, commissions, fees, and tips, income from self-employment, bonuses, overtime payments, severance pay, recurring income from pensions or retirement plans, interest income, dividend income, trust income, income from annuities, capital gains, disability or retirement benefits that are received from Social Security, workers' compensation benefits, whether temporary or permanent, unemployment insurance benefits, judgments recovered for personal injuries and awards from other civil actions, gifts that consist of cash or other liquid instruments, or which can be converted to cash, prizes, lottery winnings, alimony or maintenance received from persons other than parties to the proceeding before the court and assets which are used for the support of the family.

Income from self-employment includes income from, but not limited to, business operations, work as an independent contractor or consultant, sales of goods or services, and rental properties, less ordinary and reasonable expenses necessary to produce such income. Income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership, limited liability company, or closely held corporation is defined as gross receipts minus ordinary and necessary expenses required for self-employment or business operations. Ordinary and reasonable expenses of self-employment or business operations necessary to produce income do not include:

          (i) Excessive promotional, travel, vehicle, or personal living expenses, depreciation on equipment, or costs of operation of home offices; or

          (ii) Amounts allowable by the Internal Revenue Service for the accelerated component of depreciation expenses, investment tax credits, or any other business expenses determined by the court or the jury to be inappropriate for determining gross income.
 
In general, income and expenses from self-employment or operation of a business should be carefully reviewed by the court or the jury to determine an appropriate level of gross income available to the parent to satisfy a child support obligation. Generally, this amount will differ from a determination of business income for tax purposes.

 Fringe benefits for inclusion as income or "in kind" remuneration received by a parent in the course of employment, or operation of a trade or business, shall be counted as income if the benefits significantly reduce personal living expenses. Such fringe benefits might include, but are not limited to, use of a company car, housing, or room and board. Basic allowance for housing and subsistence and variable housing allowances for members of the armed services shall be considered income for the purposes of determining child support. Fringe benefits do not include employee benefits that are typically added to the salary, wage, or other compensation that a parent may receive as a standard added benefit, including, but not limited to, employer paid portions of health insurance premiums or employer contributions to a retirement or pension plan.

Variable income such as commissions, bonuses, overtime pay, and dividends shall be averaged by the court or the jury over a reasonable period of time consistent with the circumstances of the case and added to a parent's fixed salary or wages to determine gross income. When income is received on an irregular, nonrecurring, or one-time basis, the court or the jury may, but is not required to, average or prorate the income over a reasonable specified period of time or require the parent to pay as a one-time support amount a percentage of his or her nonrecurring income, taking into consideration the percentage of recurring income of that parent.

Excluded from gross income are the following:

Child support payments received by either parent for the benefit of a child of another relationship,a nonparent custodian's gross income. benefits received from means-tested public assistance programs,supplemental security income received under Title XVI of the federal Social Security Act, benefits received under Section 402(d) of the federal Social Security Act for disabled adult children of deceased disabled worker and low-income heating and energy assistance program payments.