Is Cryptocurrency Counted as Income for Child Support in New Jersey?

Every year, more people start investing in cryptocurrency, which has helped cryptocurrency grow into a substantial financial asset. Bitcoin and other cryptocurrencies are often used for investment purposes, to perform transactions discreetly, and sometimes even as a form of usual payment. Since cryptocurrency is still relatively new, many people are not sure how these assets are divided or considered in divorce and child support cases. In particular, many people are unsure as to whether cryptocurrency is counted as income in a child support calculation and how it can affect child support payments. Our family law attorneys can help you understand cryptocurrency and child support.

Understanding Child Support in New Jersey

Like many other states, New Jersey has Child Support Guidelines for calculating child support. One part of the calculation under the Guidelines is adding up both parents’ net incomes and allocating it between them to determine who pays child support to the other and how much support they will pay. Each parent is then expected to contribute to their child’s financial needs based on their share of this combined net income. The Guidelines are designed to ensure that children receive the same level of financial support that their parents would have given them before their parents split up.

Is Cryptocurrency an Income in New Jersey?

New Jersey law broadly defines income for child support purposes to include wages, salaries, bonuses, commissions, pensions, rental income, income from investments, and other forms of earnings. Due to cryptocurrency being fairly new, New Jersey law has yet to establish specific laws regarding whether cryptocurrency is considered income for child support purposes. In practice, however, the Court’s treat any income from cryptocurrency as investment income, which certainly counts as income under the State’s broad definition of income for purposes of calculating child support

Thus, cryptocurrency is often considered part of a parent’s income if they are making money from it like any other investment. If a parent, for example, gets paid in cryptocurrency, like Bitcoin, instead of U.S. dollars, it is usually treated as earned income. In child support cases, the Court would likely look at the fair market value of the cryptocurrency at the time it was received. For parents who trade cryptocurrency, any profits from buying and selling it will ordinarily be treated as investment income, similar to stocks or other securities. If a parent consistently makes money from cryptocurrency trading, those earnings will likely be factored into child support calculations.

Essential Information for Parents Dealing with Cryptocurrency and Child Support

Cryptocurrency Earnings Count as Income

If a parent gets paid in cryptocurrency or makes any money from cryptocurrency investments, it can be included in child support calculations. Just like wages, commissions, or rental income, digital assets are considered a financial resource that may yield income. Additionally, if a parent frequently and regularly profits from trading cryptocurrency, those earnings will likely be factored into their overall financial obligations.

Valuing Cryptocurrency can be Difficult

Unlike traditional salaries or fixed-income sources, cryptocurrency is highly volatile. Its value can fluctuate dramatically in a matter of hours, making it difficult to determine an exact value for child support purposes. To address this challenge, the Court may calculate an average income over a specific period of time rather than relying on a single valuation date. In certain cases, the Court may appoint a forensic accounting expert who specializes in cryptocurrency to assist the Court in determining a parent’s earnings from cryptocurrency.

Honesty is Key

Parents must legally disclose all financial assets, including cryptocurrency. Failing to report cryptocurrency or earnings from cryptocurrency, or hiding assets in general, can result in serious legal consequences, such as penalties, contempt of court, or modifications to support agreements.

You Cannot Hide Assets in Crypto

One of the appeals of cryptocurrency is its decentralized nature, which allows for anonymous or pseudonymous transactions. However, it is crucial to remember that Courts and attorneys have ways to determine whether someone may be hiding assets, including cryptocurrency. Trying to hide them will not work out well in the long run.

Support Payments can be Adjusted

If a parent’s income changes permanently and substantially due to cryptocurrency gains or losses, they can request a child support modification. It will be up to the Court to determine whether a modification will be granted.

Need Help with Your Child Support Case? Contact Us Today

Ensuring financial stability for you and your child is crucial when navigating child support, especially when cryptocurrency is involved. If you or your coparent have digital assets or other substantial financial resources, getting specialized legal guidance can help you navigate the challenges of child support calculations. Reach out to Moskowitz Law Group to schedule a consultation and ensure that your child’s financial future is protected.