When first acquainting yourself with the landscape involving child support, understanding what constitutes “Gross Income” is crucial. The definitions of “Gross Income” and “Adjusted Gross Income” for child support purposes diverge significantly from their meanings in tax contexts. Here’s a breakdown of key considerations and elements included in child support calculations.
Gross vs. Adjusted Gross Income
For child support calculations, the Arizona Child Support Guidelines provide specific definitions for these terms, distinct from tax terminology. It’s vital to set aside tax-related conceptions of these terms when dealing with child support.
Inclusions in Gross Income
Gross income for child support encompasses earnings from any source. This broad definition can include salaries, wages, bonuses, dividends, pensions, social security benefits, unemployment benefits, disability benefits, recurring gifts, prizes, and even spousal maintenance.
Exclusions from Gross Income
The court typically does not count income beyond what is earned from full-time employment. This approach aims to allow parents to work extra hours or take a second job without affecting child support costs. However, if a parent consistently earned overtime in the past, it might be considered if it’s expected to continue.
Special Considerations
- State Benefits: Gross income does not encompass money received from means-tested public assistance programs like TANF or SSI.
- Self-Employment: For the self-employed, gross income equals gross receipts minus necessary expenses to generate income. It’s important to differentiate business expenses from personal expenses that might be covered by the business.
- Reimbursements and Benefits: Employer reimbursements that significantly reduce personal living expenses, like cell phone or vehicle allotments, should be included in gross income.
- Unemployment or Underemployment: The court can attribute minimum wage income to unemployed parents and may attribute income consistent with a parent’s earning capacity if they are voluntarily underemployed.
- Spouse’s Income: Only the incomes of those with a legal duty to support the child are considered, excluding current spouses or stepparents, as they do not have a legal obligation.
- Divorce Assets: While the distribution of marital property is generally not considered, income generated from distributed property or wasteful disposal of assets might influence calculations.
- Taxes: Though child support calculations start with gross income (pre-tax), the Guidelines incorporate a formula to estimate net income based on the parent’s tax bracket.
Need Help?
Understanding these elements is just the beginning. Each case brings unique challenges and considerations, making it imperative to seek legal advice tailored to your specific circumstances. Whether you’re self-employed, facing underemployment, or dealing with other complex issues, a clear grasp of how the court determines gross income can provide a solid foundation for navigating child support discussions. If you’re not sure, contact us for a case evaluation and direction on how to best move forward.
