Child support is one vital aspect of family law in California. When it comes to child support and custody cases, California courts will take into consideration many financial factors. What is considered income for child support in California?
Join us as we explore the various types of income the court may look at and several factors when calculating child support amounts.
What Is Considered Income for Child Support in California?
The Statewide Child Support Guideline is based on the “net monthly disposable incomes” of both parents regarding child support in California. The parties should not rely on their “net income” when looking at their own pay stubs. They should plan on providing the total gross income so that the support calculator can formulate what the “net disposable” income will be after certain deductions are made, if any.
When you are filing a request for child support, you must ensure everything is covered, and the best way to do so is with the help of experienced divorce attorneys California. Our family law experts will help ensure you and your child(ren) get what you are entitled to. In California, the types of income considered for child support are the following:
- Wages and salaries
- Self-employment income
- Employment benefits
- Rental income
- Investment income
- Retirement income
- Government benefits
- Essentially ALL forms of income
Wages and salaries
Any income a parent earns from their regular job is subject to child support calculations, not just the regular salary they receive. Instead, the work income considered in child support calculations involves:
- Regular wages or salary
- Overtime pay
- Bonuses and commissions
- Tips and gratuities
Self-employment income
Self-employment is another type of income considered when determining child support. It includes the following:
- Earnings from a business, including profit from business operations.
- Independent contractor income.
- Gross receipts from a business are reduced by expenditures necessary for the operation of the business.
Other employment benefits
According to California Code 4058, other employment benefits are also considered income in addition to the paycheck for determining child support. This involves both employee and self-employment benefits, including:
- Stock options
- Severance pay
- Sick leave pay
- Vacation pay
Rental income
Are assets such as rental properties considered in child support in California? The answer is yes. Net rental income after expenses is taken into consideration when determining the child support amount.
Investment income
If the other party has significant investments, they will be considered when determining child support. This includes:
- Interest income
- Dividend income
- Capital gains from the sale of investments
Retirement income
Another part of child support considerations is the parent’s retirement accounts. Retirement income in child support includes:
- Pension payments
- Social Security benefits
- Annuities and distributions from retirement accounts (401(k), IRA)
Government benefits
If the other parent receives any government assistance, they will be counted as having government income. This includes government assistance such as:
- Unemployment benefits
- Disability benefits (both public and private)
- Workers’ compensation benefits
Imputed Income and Potential Income
If the court determines that the other parent is unemployed or underemployed voluntarily, it may impute income. The imputed income is an amount the court may attribute to the parent based on their earning capacity rather than actual income. This stops intentional efforts to evade paying child support by choosing not to work or by working below earning potential.
On the other hand, in some cases, the court might consider potential income. It is especially possible when the parent has a history of high earnings or skills and qualifications that could lead to higher income. This allows the court to ensure that the child support calculation is based on a comprehensive assessment of the parent’s financial capabilities.
Other Sources of Income
There are other sources of income that the court may consider to ensure the needs of the children are fairly met. They can be:
- Alimony or spousal support received from a previous marriage
- Trust income
- Prizes and lottery winnings
- Income from royalties and patents
The Statewide Child Support Guideline
As mentioned, the Family Code Section 4050 in California sets the guidelines the courts must follow when applying child support rules. The guidelines are as follows:
- Each parent’s primary obligation is to support their minor children according to their circumstances and financial situation.
- Both parents have equal responsibility to support their children.
- The guideline is assumed to be correct in all cases. Child support orders may fall below the amount mandated by the guideline formula only in special instances.
- Child support orders have to provide children with timely, sufficient, and fair support. The support the court orders should reflect the high standard of living in the state of California and the high costs of raising children compared to other states.
The courts use a complex Statewide Child Support Guideline algebraic formula to determine child support. The formula incorporates the incomes, deductions, and time spent with each child for both parents to determine a monetary amount for support (CS = K (HN – (H%) (TN)). In short, Income + Timeshare of each party.
The greater the income gap and the less time the higher-earning parent spends with the child/children, the higher the child support they owe.
Like most issues, parents can come to an agreement on a child support amount without the need for court remediation. There will be specific language needed to file a stipulation (agreement) with the court. Until a judgment is filed, this would be considered a temporary support order. Once this is included in a judgment, it is permanent order once it is signed by the judge and filed by the court.
A party may modify an order if there is a significant change of circumstance. However, no significant change of circumstance is necessary if the agreement or order was below guideline.
Conclusion
What is considered income for child support in California? Many types of income exist, from wages and self-employment to government benefits and more. The court may consider any of them when calculating the child support amount it will order the parent to pay.
The court does this to ensure that child support is fair and sufficient to sustain the child/children’s needs. It is important to remember that the court considers the children’s best interests the most important factor in child support.