What Is Considered Income?
The Statewide Child Support Guideline is based upon the “net monthly disposable incomes” of both parents. (Family Code §4055). The starting point in the analysis is the determination of the parent’s gross annual income.
Where a parent receives a regular paycheck, the calculation of that parent’s gross income is reflected in that parent’s paycheck stub. However, there are other forms of income that usually are included in calculation of child support. The precise definition of “income” has been established by the Family Code and California Appellate Court decisions
Family Code §4058 provides, in part, as follows:
(a) The annual gross income of each parent means income from whatever source derived, except as specified in subdivision (c) and includes, but is not limited to, the following:
(1) Income such as commissions, salaries, royalties, wages, bonuses, rents, dividends, pensions, interest, trust income, annuities, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, social security benefits, and spousal support actually received from a person not a party to the proceeding to establish a child support order under this article.
(2) Income from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business.
(3) In the discretion of the court, employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses, and other relevant facts.
(b) The court may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent with the best interests of the children.
In addition, Family Code §4053(f) provides that children are entitled to share in their parents’ standard of living.
Appellate decisions have held the term “net monthly disposable income” should be broadly defined. Over the last 20 years, reported appellate court decisions have generated the following list of particular forms of income that can be considered in the calculation of guideline child support.
- Meal allowance for employees
- Vehicle provided by employer
- Free housing provided by employer
- Stock options
- Reasonable rate of return on invested funds
- Shares of stock that have been liquidated
- Proceeds from the sale of a business, to the extent that they have been used for the parent’s expenses
- Repeated cash gifts
- Personal expenses paid by a family business
- Voluntary repayment of a debt by a third person
- Payment of living expenses by a company that is owned by the parent
- Sublease payments received by the parent
- Spousal support received from a prior spouse
- Lottery winnings
On the other hand, certain sections of the Family Code and other court decisions provide that the following types of income are generally not to be included as income in the calculation of child support:
- Payments received from a public assistance program
- Support received for children of another relationship
- SSI benefits
- Student loans
- Appreciation of the parent’s residence
- Unsold shares of stock
- Proceeds from the sale of a business, except as noted above
- One-time gifts and inheritances
- Life insurance proceeds