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What Counts as Income for Child Support in NC?

What Counts as Income for Child Support in NC?

What Counts as Income for Child Support in NC? Child support is based on the incomes of the parents, although there are other factors used to arrive at the amount of support to be paid. The term income is subject to interpretation, especially when you are self-employed or receive irregular income. Still, the definition is very broad and the courts usually err on the side of caution to define something as income unless there is a reason (see below) it should not be counted.  Start with Gross Income In North Carolina, the court uses gross income to calculate child support. Using the gross income to determine child support means parents cannot manipulate their incomes by rearranging payroll deductions. For wage earners who receive W-2 statements, gross income is the amount paid to you before any payroll deductions are made, even when they are mandatory payroll deductions such as state and federal taxes, Medicare tax, Social Security tax and unemployment tax. There are mandatory pension contributions payroll deducted for certain state employees. Frequently, state employees make credit union payments for personal or vehicle loans via payroll deductions. Gross income also stays the same regardless of voluntary payroll deductions chosen by the employee, such as pre-tax 401(k) contributions, life insurance or medical, vision or dental insurance. What Kind of Income Counts? The NC Child Support Guidelines (AOC-A-162 effective 2015) are frequently revised but they currently define income as “a parent’s actual gross income from any source.” This very broad definition includes “income from employment or self-employment (salaries, wages, commissions, bonuses, dividends, severance pay, etc.), ownership or operation of a business, partnership, or corporation, rental of property, retirement or pensions, interest, trusts, annuities, capital gains, Social Security benefits, workers compensation benefits, unemployment insurance benefits, disability pay and insurance benefits, gifts, prizes and alimony or maintenance received from [a third party].” Beyond that, the court will include as gross income “[e]xpense reimbursements or in-kind payments (for example, use of a company car, free housing, or reimbursed meals) received by a parent in the course of employment, self-employment, or operation of a business are counted as income if they are significant and reduce personal living expenses.” What Kind of Income Doesn’t Count? In the vast majority of cases, if you have a new spouse or you live with someone, that person’s income is not included when determining child support. If you also have a...

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Why Do I Have to Get All These Documents To Start My Case?

Why Do I Have to Get All These Documents To Start My Case?

Why Do I Have to Get All These Documents?  When a client hires us, the first order of business is to review documents. The typical list of documents we request includes tax returns and statements (i.e., W-2 or 1099 statements), bank and credit card statements, deeds and mortgage statements, health insurance and daycare costs, and vehicle registration or title, to name a few. Reason #1 – To Identify the Marital Estate Your attorney doesn’t know (with enough detail) what assets and debts you have. For example, a client might not realize a cash/sweep account is associated with an IRA or could forget there is an outstanding loan against the account. Only by analyzing the documentation can an attorney properly advise you or start meaningful negotiation with the other attorney. Reason #2 – Civil Discovery & Subpoenas Just because you don’t plan to take your case to court doesn’t mean your ex won’t file a lawsuit. Once a lawsuit is filed, either party can serve civil discovery  which is the process by which the documents are made available to the opposing party before court. In a family law case, your life is an open book so to speak. Subpoenas require people to testify and/or provide documents. An attorney has the ability to prepare and serve a subpoena on you and anyone else. Reason #3 – Court Rules Court rules now require mandatory disclosure of these records, regardless of whether there is discovery and/or subpoenas. Even if there is no subpoena or discovery in a child support case, state Guidelines automatically require: “Income statements of the parents should be verified through documentation of both current and past income.” They go on to say “Suitable documentation of current earnings . . . includes pay stubs, employer statements, or business receipts and expenses, if self-employed.” Documentation of current income must be supplemented with copies of the most recent tax return to provide verification of earnings over a longer period.”  Reason #4 – Documents Are Evidence If there is a lawsuit filed at some future date, you’ll have the proof to show the classification of assets and debts, whether assets and debts are marital, separate or divisible. Showing values of property and balances of debts and interest on specific dates is key, especially around the date of separation. For example, property in equitable distribution cases is valued as of the date of separation, but the mortgage payments made after the date of separation might also be a point of negotiation....

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Getting Attorney’s Fees in Family Law Cases

Getting Attorney’s Fees in Family Law Cases

Getting Attorney’s Fees in Family Law Cases In North Carolina family law cases, a party may seek attorney’s fees in court cases involving child custody and support, and for temporary and permanent alimony, among other claims. With a couple of rare and unique exceptions to the rule, attorney’s fees aren’t usually available to be awarded by the court in equitable distribution cases for division of marital assets and debts. Child Custody and Support Claims The law permits parents to ask the court to award attorney’s fees in child custody and support cases, including cases when a parent files a motion to modify the order that is already in place. There are three requirements. First, the person asking for fees must be an “interested party” meaning he or she is someone entitled to exercise the legal right to participate in the lawsuit. Second, the person must be acting in good faith, not filing a frivolous claim.  The third requirement for the court to address is whether the person “has insufficient means to defray the expense of the suit.” In other words, the person had to turn to the courts to get help, which has created a financial hardship.  If the claim was for child support there is a fourth requirement.  The parent who should be paying support “has refused to provide support which is adequate under the circumstances.” If the parent files a frivolous claim, the court is also entitled to award fees to the other parent. NC Gen. Stat. §50-13.5  Alimony and Temporary Alimony If the court awards alimony or temporary alimony, called postseparation support, the judge has the authority to award attorney’s fees if the financially dependent spouse doesn’t have sufficient means to subsist during the pending case. That means the dependent spouse can’t meet living expenses until the judge enters an order for alimony. As is the case with children’s claims, the court must rule on whether the dependent spouse “has insufficient means to defray the expense of the suit.” These requirements also apply when the dependent spouse files a motion to modify the alimony. NC Gen. Stat. §50-16.4.  At the trial, the attorney submits an affidavit about the fees, along with billing statements to show what has been paid. The judge generally confirms the fee is reasonable, considering the attorney’s skills and qualifications, and the type of work the attorney performed. Customarily, the client has to pay...

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Five Myths About Child Support in North Carolina

Five Myths About Child Support in North Carolina

Five Myths About Child Support in NC Myth one: You can stop paying child support if you don’t get visitation with your child. Wrong. You can’t stop paying child support just because you do not get the visitation time you wanted or that you were entitled to pursuant to a separation agreement or court order. Legally, child custody or visitation and child support are completely separate matters. You must file a custody claim to get or enforce a custody order or to enforce a separation agreement. Myth two: Once I file a motion to decrease my child support obligation, I can stop paying the amount that is owed until I see what happens in court. Wrong. You can be held in contempt of court for failure to obey a court order, even when you think the obligation will be decreased. In other words, you do not have the right to violate an order just because you are trying to get the obligation decreased. Myth three: I am entitled to know whether my child support payment is being used by my ex’s new boyfriend or girlfriend, or wasted on something other than my child. Wrong. Child support is determined based on the incomes, insurance premiums, daycare and other expenses related to your child. Once the amount of child support is determined, that is the end of the analysis. There isn’t any requirement for the parent who receives child support to report what the funds were used for, either to the other parent or to the court. Myth four: When my child stays with me for four weeks during the summer when she is out of school, I do not have to pay my ex any child support for that month. Wrong. If you are required to pay child support by a court order, that time was already accounted for when the child support was calculated. The answer is the same when there is a separation agreement unless it specifically says you can stop paying it under these circumstances. Myth five: My ex just got a really great job (or inherited money), so I am entitled to an increase in the child support I get, or I am entitled to a decrease if I’m paying child support. Wrong. If that is your only basis for trying to change the amount of child support, you are out of luck. That fact alone is not...

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Medical Expenses and Child Support

Medical Expenses and Child Support

Medical Expenses and Child Support The NC Child Support Guidelines base support obligations on nationally generated data of average living expense for families. The Guidelines assume the custodial parent is paying all of the day-to-day expenses of shelter, groceries, clothes, and other necessities. The general rule is that the parent paying child support doesn’t have to pay amounts above that amount for support. One exception to this rule, when the other parent must pay for other expenses in addition to child support, is the child’s medical expenses. The custodial parent is responsible for the first $250.00 of the child’s medical expenses per year. Beyond that amount, the judge will typically order the parents to share those expenses. What Counts as a Medical Expense? The 2015 Guidelines define medical expenses as “reasonable and necessary costs related to orthodontia, dental care, asthma treatments, physical therapy, treatment of chronic health problems, and counseling or psychiatric therapy for diagnosed mental disorders.” Only out-of-pocket medical expenses that are not paid by insurance are subject to be divided. Examples of expenses to be divided include co-pays for visits to the doctor or prescription medications. What Do Judges Do? As is the case in many family law matters, the judge has a great deal of discretion to order what he or she believes is fair. In my experience, most of the judges equally divide these expenses between the parents. When there is a big difference in incomes, the court is more likely to divide the expenses unequally. Occasionally, a judge will assign all of the medical expenses to one parent. Judges are not required to use any specific manner of payment, although they will commonly have a parent who pays an expense give the other parent a copy of the receipt. Within some reasonable time period, the other parent must reimburse the parent who paid the expense for his or her share of the cost. Read More: Child support and health insurance.   Amy Edwards & Associates, PLLC. Our attorneys are licensed only in NC.© 2015....

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The Basics of Child Support and Health Insurance

The Basics of Child Support and Health Insurance

The Basics of Child Support and Health Insurance See Update Is There Any Insurance? While there are some exceptions, when a parent has insurance that is “currently available . . . at a reasonable cost” the court is required to “order either parent to obtain and maintain medical health insurance coverage.” When is insurance available at a reasonable cost? The 2015 NC Child Support Guidelines were just amended by Session Law 2015-220. The new law says health insurance is “. . . considered reasonable in cost if the coverage for the child is available at a cost to the parent that does not exceed five percent (5%) of the parent’s gross income. In applying this standard, the cost is the cost of (i) adding the child to the parent’s existing coverage, (ii) child-only coverage, or (iii) if new coverage must be obtained, the difference between the cost of self-only and family coverage.”  If health insurance is not available, the court must require parents to provide it when and if it becomes available. Although there is no specific mention of vision insurance in the Guidelines, the court may require a parent to provide dental insurance. How Does Insurance Change Support? In North Carolina, the Child Support Guidelines start with the gross incomes of parents, before any taxes or other payroll deductions, to determine the child support obligation. Then, the support obligation is adjusted to account for payment of work-related child care and/or health insurance. When parents (or their spouses) pay premiums for a child’s coverage, that parent is credited and the amount of support is adjusted accordingly.  It is not a dollar for dollar credit, which means it is essentially prorated between the parents so they are sharing the cost. How Much is Credited to the Parent? A parent is entitled to a health insurance credit only for the cost to cover the child or children. When a parent has a family insurance policy, it is important to obtain an itemization of the premium cost.  For example, if a family insurance plan is $300 per month, and the cost to cover only the employee is $100 per month, the amount credited for the children would be $200 per month.  If no itemization is available, the cost is divided by the number of people covered by the plan.  The insurance premium is often paid by payroll deduction.  Note that if a parent’s employer pays the...

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