What Counts as Income When it Comes to Child Support?

When parents decide to separate or divorce in New Jersey, it is important to have an understanding of how income affects child support. Under the New Jersey Child Support Guidelines that were produced by independent experts, the Court calculates what an intact two-parent household average spending would be on a child based on both separated or divorcing parents’ total income. The calculation then allocates child support based on each separated or divorcing parent’s share of their combined income. The Guidelines are designed to ensure that a child whose parents have separated or divorce continues to be financially supported to the same extent that the child would have been if their parents were still together. The Guidelines calculate each parent’s estimated net income by subtracting estimated taxes, certain other deductions from paychecks, and any existing prior child support obligations for other children from each parent’s gross income.

What Counts as Income?

When determining child support, the Guidelines first consider each parent’s gross income, which includes a wide range of both earned and unearned income. Gross income for child support calculation purposes includes, but is not limited to:

• Wages, salaries, commissions, and bonuses
• Income from self-employment or business ventures, after deducting certain permitted business expenses
• Retirement benefits such as Social Security, pensions, annuities, and distributions from retirement accounts
• Workers’ compensation, unemployment benefits, and disability payments
• Interest, dividends, capital gains, and other investment returns
• Rental income and profits from property or real estate transactions
• Alimony or other spousal support payments

Taking both earned and unearned income into account ensures that child support reflects each parent’s ability to contribute to the support of the child to the maximum degree.

What Does Not Count as Income?

Not all sources of money are considered income under the Guidelines. The following are examples of income that are typically excluded:

• Welfare
• Child support received for other children
• Non-income producing assets, unless the Court finds that the intent of the investment in the asset was to avoid the payment of child support

Since these types of income are not considered income for purposes of calculating child support, they generally will not affect the calculation of child support obligations.

Dealing with Sporadic and Hidden Income

One of the parents may have sporadic income, such as overtime, royalties, or income from a side business. The Court will often average those earnings over time, unless the parent earning it can show the Court that they will no longer earn such income. If a parent is temporarily or intentionally unemployed or underemployed, the Court has the authority to impute them with income by estimating and assigning what that parent should be earning based on their skills and job history. Imputation of income essentially means assigning an income to a parent for child support calculation purposes that they are not necessarily earning at the time.

Impact on Your Child Support Case

Understanding what counts as income is crucial because it directly affects the amount of child support the court will order. If income is underreported or overlooked, the support amount may be unfair, which could place too much burden on one parent or not provide enough for the child. Being informed helps you present accurate financial information, spot potential discrepancies, and ensure a fair outcome that reflects both parents’ ability to contribute.

Call an Attorney to Understand What Counts as Income for Child Support

Ensuring that child support is accurately calculated requires legal expertise. At Moskowitz Law Group, we guide our clients through every step of the process with skill and attention to detail. Our team helps collect and organize essential financial documents to ensure the Court has a clear picture of each parent’s income and financial circumstances. If you or a loved one is currently in need of guidance on child support, our firm provides trusted advice and zealous advocacy to protect your rights and your child’s best interests.

Contact us today for a consultation.