Child Support Monthly Net Resources
I get a lot of people coming into my office confused about exactly what income counts for the purpose of determining child support. The answer is usually pretty much everything that can be proved as income counts for calculating child support, but there are a few limited exceptions to that.
In order to determine the amount of child support under statutory guidelines, Texas law applies a percentage formula to the “monthly net resources” of one parent or conservator ( the “obligor”). The percentage changes based on the number of children involved starting at 20% for the first child, and increasing by 5% per child after that until the maximum value. That part is simple enough, however the monthly net resource number to multiple that percent by is a little bit more complicated for a variety of reasons.
Child Support Income Inclusions
In general, your child support monthly net resources are the sum of all sources of income or assets from which income could be derived in a given year. Thus, “net resources” includes your salary, wages, tips, commissions, overtime pay, bonuses or any other compensation received for your personal services. This “net resources” calculation applies regardless of whether you are self-employed, a contract employee, or any other unique form of compensation.
Your “net resources” also includes any unemployment benefits, retirement pay, pension income, severance pay, social security benefits (other than supplemental security income), rental income from real or personal property, disability or workers’ compensation benefits, alimony, spousal maintenance, interest income, stock dividends, capital gains, trust distributions, annuity income, royalty income, gifts and prizes.
Bear in mind that the above list is not all-inclusive, either, and that any money received by you will likely be included as part of your “net resources” unless it is a recognized as a specific exception within the Texas Family Code. In fact, when explaining the concept to my clients, it tends to be easier to focus on the various exceptions rather than trying to go over the complete laundry list of items that DO qualify, as the items that DON’T are few and far between.
Child Support Income Exclusions
Some of the exceptions to income being included in the child support calculations include your spouse’s income, the return of capital or the return of principal owed to you on a note; accounts receivable; certain welfare benefits (ex. food stamps or WIC benefits), and foster-care payments.
Finally, you may deduct a limited number of items from your child support monthly net resources. Deductible items are: (a) state income taxes, if any; (b) social security taxes; (c) federal income taxes based on the tax rate for a single person claiming one personal exemption and the standard deduction; (d) union dues; (e) expenses for health insurance coverage for your child; and (f) cash medical support for your child. However, you must bear in mind that you may not subtract deductions for contributions to an individual retirement account or 401(k) plan, insurance coverage for persons other than your child, employee stock purchases or similar items.
Child Support Pay Periods
The other minor point that tends to make things just that much more confusing, is that often people are paid biweekly. Biweekly pay is NOT the same as being paid twice a month, and the calculation changes slightly based on this distinction. If you are paid biweekly, you would multiply your net biweekly income by 26 (the amount of pay periods in a year) and then divide by 12 to reach your monthly net resources. If you are paid twice a month, you would multiply that number by 24 (the amount of pay periods in a year) and divide that number by 12. It is a small, but not insignificant difference that causes a lot of confusion for people. Obviously if you are paid once a month, that calculation becomes a lot easier and you can simply use that value without doing any additional math.
Child support is one of those areas where I find myself doing as much math as I do legal work, which is equally important to any of the legal work I do in this arena. Often as attorneys, we don’t have as much training in the areas of accounting and math as we do legal work, so its important to double check any numbers, as once they become an order of the court, it is a lot more difficult (and more expensive) to do anything about it.