A universal standard in the state standards to establish the child support is that the final payment is determined according to the income of the parties. Therefore, it is vital that parents understand what type of funds may be considered “income” within the rules of child support and which are excluded from its definition.
“Income” for purposes of child support
The rules of each state contain a definition of “gross income”. As a minimum, and pursuant to federal law, the definition of “income” must take into account all income and gain to get the parent without custody. Therefore, the definition of gross income generally includes money received from any source, including:
- wages and salaries (including tips, commissions, bonuses, utilities, deferred awards and severance payments);
- income from overtime and second jobs, income from contractual agreements, income from investments and interest (including dividends);
- pension income;
- income from trusts or properties;
- income for life annuities;
- capital gains (unless it is recurring);
- social security benefits;
- benefits for veterans;
- benefits by service in the Army;
- payment for training in the National Guard and reserves;
- benefits received in place of monetary gains (i.e., workers ‘ compensation, unemployment insurance, subsidies to strike, and disability insurance);
- donations and prizes (including lottery winnings and bets);
- instructional grants (including fellowships or subsidies that are available for personal expenses, and housing);
- income of a new spouse, to the extent that that income directly reduces expenses of the parent;
- spousal support received from the hands of another person other than the spouse;
- income from self-employment (including rents, royalties, and profits assigned to an individual by a business or enterprise in the form of a sole proprietorship, a partnership, a joint venture, a corporation of capital closed, an agency or an independent contractor).
The income also includes articles not monetary, such as the performance of the work (this includes the use of a car of the company, free housing or reimbursement of expenses) when these benefits reduce the personal expenses. Basically, the rules for the sustenance of the children to recognize as income any type of equity held by the parent, taking into consideration all the financial resources possible.
Income “not taken” and child support
Because the standards of livelihood of children attempt to define “income” under the broadest concept possible, there remains the question of whether the income is “not made” (the revenues that exist only on paper but have not been received yet) are “income” for purposes of sustenance. Then we discuss various sources of income are not achieved and the approaches of various states to classify the sources as “income” for child support.
Individual accounts retirement (individual retirement account, IRA). A common question related to child support is whether the interest earned on an IRA should be considered “income” when the interest is not withdrawn but is reinvested back into the IRA. Cases arising in Alaska, Colorado, Montana, and Ohio hold that the interest on an IRA is income for purposes of sustenance. On the other hand, cases in New Mexico, Louisiana, Tennessee, and Virginia argue that the interest from an IRA is not income for the same purpose.
Unrealized gains product of share options without settling. A court in Ohio has determined that the capital gained by an employee through stock options is considered “income” for purposes of child support, even if the winnings are not in cash. Although this case is the only one in the country that defines as income the capital city of an option on shares without liquidating, the trend may vary. A recent case from Florida applied the exact same principle on which the capital gains of stock options unliquidated served the purposes of spousal support.
Retained earnings are the product of a corporation, a society or an individual company. The states differ on to consider the earnings of a corporation, a society or an individual company as income for purposes of child support. Some states argue that the retained earnings of a business are income for the purpose of livelihood, while others do not see it as such. Of any way, other states are in an intermediate point by holding that the fact that the retained earnings of a business are income depends on if the parent who pays the sustenance is majority owner of the business and, therefore, has the right to the retained earnings.
Income from a trust. Sometimes people make plans and making financial decisions that result in an income dummy, that is to say, an income that is reported to the Internal revenue Service but not received. For example, in a case of Louisiana, the parents of the mother of the family gave part of the property in a trust, which generated an income. The income is then reinvested in the trust. Since the mother could not have access to the trust, the court determined that it was an income, “ghost” and could not be considered for purposes of child support.
Capital gains from transactions on the exchange. In a New York case, the court held that the gains considered a tax dummy, that is to say, gains that are reported to the Internal revenue Service but not received, should not be considered income for the purposes of sustenance. Now, in other states it is held that all capital gains are considered income for purposes of child support.
A Child support: How to obtain the help of an attorney
If you are facing a dispute the potential for the sustenance of children, whether due to a divorce or because he is a single dad, a lawyer specializing in family law can help you with a fair representation of the parties in the process. A lawyer specializing in family law will work to obtain the best possible result in the execution of the support order, in the fulfillment of an order already existing, or in the establishment (or rejection) of the paternity. The first step is to find a lawyer spatialized in family law in your area.