What Is Considered “Income” When Calculating Child Support?
All parents need to provide for their children. This includes not only providing love, care, and support, but also providing for them financially. Responsible parents strive to make sure that their child always has a roof over their head, clean clothing to wear, enough food to eat, and access to quality healthcare.
When the parents are living together, they typically provide that support directly. However, when the parents are divorced or separated, a court-issued child support order may be necessary to ensure that the parents continue to meet their financial obligations to their children. “But how much should a parent be paying?”, you might be wondering. Well, that’s up to the court to make that determination.
The amount depends on a variety of factors, with income being the most important one. What is considered “income” for the purposes of calculating child support? This will be the topic of today's post.
At the Law Offices Michael S. Rosofsky, we provide legal advice and guidance to parents who are going through a divorce or separation. Our child support attorney in Annapolis, Maryland, can answer your questions about the legal guidelines and requirements during a free phone consultation.
Actual Monthly Income in Calculating Child Support
Before determining how much either parent should pay in child support, the court looks at the family’s custody arrangement. As a rule of thumb, the parent awarded primary physical custody (meaning the child primarily resides with them) will usually be entitled to child support payments from the other parent. However, things can get complicated if any of the following is true:
The parent with primary physical custody also earns significantly more than the other parent; or
The parents have shared physical custody (Under Maryland law, shared physical custody refers to an arrangement where each parent keeps the child for more than 25% of the year, which equates to at least 92 overnights.)
After reviewing the custody order, the court will consider each parent’s actual monthly income to calculate the appropriate support amount. For the purposes of determining a child support obligation, Maryland Family Law §12–201 considers certain sources of income while excluding others. The following are considered “income”:
Salary
Wages
Bonuses
Commission
Dividends
Interest income
Pension
Annuity income
Trust income
Alimony and spousal maintenance received
Social Security, workers’ compensation, unemployment insurance, and disability insurance benefits
Based on the unique circumstances of each case, the court may also consider gifts, prizes, severance pay, and capital gains as “income” when calculating child support.
Deductions From the Actual Monthly Income
Once the court arrives at the total amount that meets the definition of “income” under the law, the court may deduct certain payments to determine what is known as the adjusted actual income. If either party has an obligation to pay alimony or child support for children from previous relationships/marriages, these amounts will be deducted from the parent’s actual monthly income.
The court then uses the Maryland Child Support Guidelines to calculate how much the parent would pay in child support. These guidelines include a formula that takes into account the following:
Each parent’s actual monthly income
Each parent’s adjusted actual income
Health insurance costs
Work-related childcare expenses
Extraordinary medical expenses
Financial statements
Maryland courts use the same formula for calculating child support for all families with a combined household income not exceeding $360,000 per year or $30,000 per month. For those whose combined household income is above the threshold, courts have the discretion to consider other factors when determining the appropriate child support obligation.
Imputed Income and Voluntary Impoverishment in Child Support Calculations
Sometimes, a parent may intentionally lose their job or not make enough money on purpose to avoid a child support obligation or decrease the amount they will be ordered to pay. However, that doesn’t work this way as courts recognize the risk of “voluntary impoverishment” in child support cases.
But how does a court determine that a parent is voluntarily impoverished? A parent is considered voluntarily impoverished when they make less money or quit their job by their own choice, and there are no factors beyond their control that cause their impoverishment. If the court determines that a parent who owes child support is voluntarily impoverished, it may impute that parent’s income.
Imputing income means figuring out how much a person can make based on that person’s capabilities rather than their actual income at the moment. Courts consider a variety of factors when deciding whether to impute the voluntarily impoverished parent’s income and how much their income could be, including their age, employment and earnings history, skills and education, physical condition, and more.
Let Us Help You Calculate How Much Your Child Support Will Be
If you do not understand what formulas courts use and what is considered income when calculating child support, you may not be certain that the court is not overestimating or underestimating how much you or the other parent make. At the Law Offices Michael S. Rosofsky, we can help you make sure that the child support award is appropriate and that you won’t be paying more than you have to or receive less than you are entitled to. Get in touch today to request a free case evaluation.