Determining Income for Child Support Calculations
How can I make sure that child support is calculated according to my income?
During a divorce in New Jersey, the process of determining what each party’s income is a complex one.
Income determines whether alimony will be paid to maintain the other party’s standard of living, as well as be considered in the determination of child support payments. One would think that determining income would be as simple as reviewing the person’s income tax returns. This, however, is not the case; many other factors play into one’s “income,” as it is defined by the New Jersey Superior Court, including non-monetary assets, unnecessary business expenses that falsely deflate income, in-kind goods and services, and professional skills and employability that have not been utilized due to marital circumstances. Read on to learn more about how income is determined for the purposes of alimony and child support.
The Many Faces of Income
New Jersey child support laws dictate that a detailed review of each parent’s gross income be considered in determining monthly child support obligations. Income takes many forms, including non-monetary ones. Below are some examples of income that lend themselves to alimony and support duties, though they may not be reflected in common tax documents.
Determining Gross Income
Income includes salary or profits, in the case of business owners (minus “ordinary and necessary business expenses”), as well as non-monetary forms such as assets, income from management of rentals, and in-kind goods and services enjoyed. For those who make a salary or are contract workers, gross income is what is earned before taxes are withdrawn. Additionally, investments that either party holds are subject to being considered as income for the purposes of determining child support payments.
For business owners, the business’s net profits are considered income, and only exclude the business’s ordinary and necessary expenses. These expenses must be directly tied to the functioning of the business. For example, payments for a company car can be considered ordinary and necessary business expenses. On the other hand, personal vehicle expenses are not.
In many cases, a spouse will use the business account to pay for personal expenses, such as utilities, technology, or even vacations, among many others. If an attorney proves or the court deems that an expense is not directly related to the functioning of the business, the amount will be added back to the business’s profit for purposes of determining income, according to New Jersey child support laws.
Additionally, money flowing in that is not directly business-related can be considered income for the purposes of the child support payment. For example, if the business has extended a loan and monthly payments are coming in, or if the business owns a property that is being rented, and monthly rent is being received, each of these will add to the company’s gross income.
Sometimes, one’s actual income doesn’t reflect their professional capacity. This could be true in the case of a stay-at-home parent who, despite limited or absent traditional income, has an advanced degree and therefore high employability. In this case, a divorce attorney can help to identify the resources to prove what their income would be if they were engaged in the workforce. This is called imputing the party’s income. In order to find what the spouse’s earnings would be, experts look at their professional qualifications, education, and training; the region in which they live and the corresponding available jobs that match their qualifications; and average earnings for corresponding professions as reported by the New Jersey Department of Labor and Workforce Development. From this research, a spouse’s income is imputed, and the argument is made that they are responsible for providing child support payments based on their potential employment income figure, though they have not made such an income recently due to their marital circumstances.
Finally, non-monetary in-kind goods and services are audited to determine their monetary value and added to income for the purposes of determining child support payment. Whether these in-kind means are personally or professionally tied (usually business enjoy in-kind options in exchange), the court will determine what the market value of the goods or services are and add this figure to the party’s gross income.
Throughout this process of determining fair monthly child support payments, having the support of a skilled and experienced divorce attorney is imperative to ensure that the payments you give or receive are fair.
Brick Child Support Attorney Help You Navigate through your Case
At Bronzino Law Firm, our attorneys are experienced supporters of clients across Point Pleasant, Brick, Wall, Sea Girt, Spring Lake, and the greater Ocean and Monmouth County Areas in determining and meeting their custody and child support obligations.
To schedule a confidential consultation with a member of our firm today to discuss your child support obligations, please visit our online form or call us at (732) 812-3102 to learn more about your options.