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What Is Considered Income In Terms Of Child Support Guidelines?

You agreed to grant physical custody of your kids to your spouse as part of your divorce settlement. You know that the court will order you to pay child support for your children. In general, the state bases the amount of child support that you will pay on the income of both you and your future ex-husband or ex-wife.

You have multiple sources of income, including your salary as an accountant, income from rental properties, oil and gas royalties and interest and dividends from your investment accounts. For those that only have one source of income from wages, it is simple to determine how the court will calculate child support. However, since you have several income streams, it is important to understand what the court considers income, and what it will exclude. An experienced divorce attorney can help you understand the child support laws in Colorado.

How the government views it

Federal law includes all your income and earnings as the non-custodial parent. Gross income includes money that comes from multiple sources. In addition to your salary, gross income can include, but is not limited to, trust income, recurring capital gains, gambling winnings and rent and royalty income. The court may also consider non-money employment perks that reduce your personal living expenses as income.

In terms of unrealized income, each state has its own set of guidelines as to whether certain sources should be included as income for child support purposes. For example, Colorado generally considers the interest earned on your IRA account to be income that should be included in the child support calculation.

Other sources of unrealized income that the state may rule should be included are unrealized gains from unexercised stock options and retained earnings from corporations, partnerships or sole proprietorships. This means that if your rental properties are held by C-corporations or S-corporations, the court may decide that the retained earnings are subject to the child support calculation.

Where there may be leeway

Depending on whether you actually received money, the court may or may not include capital gains from stock transactions as part of your income that is subject to child support. The same holds true regarding income from a trust. If the income generated by the trust your parents set up for you never actually makes it to your bank account and is diverted back into the trust, the court may decide to exclude this income source when calculating child support.

When you have multiple sources of income, it makes the child support calculation more complicated. Also, the law is constantly changing. C.R.S. ยง 14-10-115 Colorado Child Support Guidelines has been updated three times in the last five years. This includes a 2018 change to how the courts define "adjusted gross income" and "alimony or maintenance received". Be sure that you understand your rights and options when it comes to all aspects of your divorce. If you have any questions about income in terms of child support guidelines, please contact The Law Office of Alexandra White at 303-416-5940. 

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