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’s a reason 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 child with someone else and that parent pays child support to you for that child, it is not counted as income to you. The most recent version of the Guidelines makes it clear that you do not have “income” just because your employer pays Social Security and Medicare taxes on your behalf, in addition to what you have paid by payroll deductions. Nor do you have “income” when your employer pays a third party for your “health, disability or life insurance or retirement benefits.” Your W-2 may reflect the amount your employer paid for your health insurance, but it is not counted as income for tax purposes or for child support. Adoption assistance benefits are not income for child support purposes, nor are “means-tested public assistance programs, including…Temporary Assistance to Needy Families (TANF), Supplemental Security Income (SSI), Electronic Food and Nutrition Benefits, and General Assistance.”