What is Considered Income for the Purpose of Calculating Child Support?

When you have an obligation to pay child support, what is income for the purpose of calculating the total amount owed?
For the purposes of determining child support, the court need to calculate what the net income of a payor is, not the gross income. Net income is the “total of all income from all sources” minus the deductions that the Marriage and Dissolution of Marriage Act allows. Payors typically want the same deductions they are allowed from the government on their taxes, but the Marriage and Dissolution of Marriage Act is not as broad. Deductions for depreciation are allowed on one’s tax returns, but typically not as a deduction for child support, unless you can demonstrate that it is an expenditure that is reasonable and necessary for the production of income. The concept of “net income” is clearly and intentionally broader than simply wages or earnings. Illinois case law consistently holds that the Illinois Marriage and Dissolution of Marriage Act is to be used for determining net income available for child support as opposed to other statutorily defined definitions, including the IRS tax code.
Second jobs are also included as income for support purposes, along with bonuses and other incentive pays. Monies made from investments can also be considered. Once you have established the income from all sources, the deductions are calculated.
Under Illinois law, you can deduct any tax you pay to the government to determine net income, along with any mandatory expense you have to pay for employment, like union dues. You are allowed to deduct your health care premiums. If you owe support for another child, that is also an allowable deduction. If you are self-employed, your deductions will be scrutinized to determine of the expenses you are trying to write off are truly business expenses. It might be a business expense for IRS purposes, but not for child support purposes.
It is important to review the payor’s tax returns, and not just their pay stubs in order to calculate the support properly. It is not uncommon to see a payor take a lot of deductions from their payroll check, and essentially overpay their taxes during the year. At the end of the year, the accountant prepares the taxes and determines that that the payor paid more than required, and ends up with a large refund. In a properly calculated review of the payor’s net income, the Federal and State tax is determined to ensure that support is proper.
Calculating child support can be difficult to determine. There are many nuances, along with the statutory factors that must be considered. It is well worth your money to have someone run the appropriate numbers and consider the various factors to ensure that you receive, or pay, the appropriate child support.

Leave a Reply