Gross Income
Parents' Gross Income Helps Determine Child Support Amount
Gross income is one of the primary factors that the child support calculation is based on. However, there are several factors that play into what is considered gross income for the purposes of calculating child support in Georgia.
Gross income means all income from any source, whether earned or unearned. There are certain adjustments that may be made to gross income to reduce it. These adjustments are made under the following circumstances: 1) a party is self-employed, 2) there are preexisting child support orders, and 3) there are other qualified children residing with a party.
What Counts as Gross Income?
1. Salaries
2. Commissions, fees and tips
3. income from Self-employment
4. Bonuses
5. Overtime Payments
6. Severance Pay
7. Recurring income from pensions or retirement plans including, but not limited to, Veterans' Administration, Railroad Retirement Board, Keoghs, and Individual Retirement Accounts
8. Interest Income
9. Dividend Income
10. Trust Income
11. Income from Annuities
12. Capital Gains
13. Disability or retirement benefits that are received from the Social Security Administration
14. Disability benefits that are received pursuant to the federal Veterans' Benefits Act of 2010,
15. Worker's compensation benefits, whether temporary or permanent
16. Unemployment insurance benefits
18. Gifts that consist of cash or other liquid instruments, or which can be converted to cash
19. Prizes
20. Lottery winnings
21. Alimony or maintenance received from persons other than parties to the proceeding before the court
22. Assets which are used for the support of the family
23. Other income.
What is Not Considered Gross Income?
There are also several categories of "income" that are not considered gross income for purposes of calculating child support. These exclusions are:
Child Support Payments Received
Public Assistance Benefits
Foster Care Payments
Nonparent's Income
Self-Employment Income
What if you own a business or have self employment income? This is still considered gross income and must be included when calculating child support. According to Georgia law:
Income from self-employment includes income from, but not limited to, business operations, work as an independent contractor or consultant, sales of goods or services, and rental properties, minus the ordinary and reasonable expenses necessary to produce such income. Income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership, limited liability company, or closely held corporation is defined as gross receipts minus ordinary and reasonable expenses required for self-employment or business operations. Ordinary and reasonable expenses of self-employment or business operations necessary to produce income do not include: 1) Excessive promotional, travel, vehicle, or personal living expenses, depreciation on equipment, or costs of operation of home offices; or 2) Amounts allowable by the Internal Revenue Service for the accelerated component of depreciation expenses, investment tax credits, or any other business expenses determined by the court or the jury to be inappropriate for determining gross income.
O.C.G.A. § 19-6-15(f)(1)(B). If a parent is self-employed, an amount will be deducted from that parent's gross income for one-half of the amount of any applicable self-employment and Medicare taxes being paid by that parent. O.C.G.A. § 19-6-15(f)(5)(A).
Adjusted Gross Income
In addition to deductions made for self-employment related taxes, there are two adjustments that may be made to a parent's gross income for the purposes of a child support worksheet that may reduce that parent's gross income:
1) a pre-existing child support order, and
2) the presence of other qualified children in that parent's residence.
If a parent is currently paying child support in accordance with a child support order entered prior to the initiation of the current action, that parent may receive a credit for such payments in the form of a reduction of his or her income on the child support worksheet. The maximum credit allowed is an average of the amount of current child support actually being paid under the preexisting child support order over the past 12 months prior to the current divorce or child support action. Payments made by a parent on arrearage amounts may not be credited to that parent for the purposes of reducing his or her income for child support calculation purposes.
A parent's income may also be reduced, for child support calculation purposes, if that parent is currently caring for and supporting another child who resides with that parent. The purpose of this adjustment is to ensure that any child support order rendered as a result of the proceedings does not cause the parent seeking the adjustment substantial hardship in caring for either child.
Other Income
Fringe benefits and variable income are other sources of income that are included in the gross income calculation for the purpose of Georgia's child support worksheet.
Variable Income
Sometimes monthly income isn't as easy to calculate due to the fact that your monthly income may vary from month to month. Income that varies from month to month can include commissions, bonuses, overtime pay, and dividends. While variable income can be unpredictable, Georgia law requires that this income be considered for child support purposes. Each individual's case is different, but if variable income is involved the court will typically average that income over a time period that reasonable and include that amount in the parent's fixed salary. Keep in mind that this process of averaging variable income isn't used in every case of variable income. If the income is received on an irregular basis, then the court could decide not to average that income and deal with it another way.
Fringe Benefits
To recruit and motivate employees, companies will often provide their employees with "fringe benefits". Fringe benefits are given to an employee in addition to their salary/compensation. Fringe benefits include things like a company car, subsidized meals, tuition reimbursement, housing, or room and board etc. It's important to remember that fringe benefits are sources of income that are usually included in the gross income calculation for the purpose of child support in Georgia. Fringe benefits received by a parent in the course of his or her employment in operation of a trade or business will be counted as income if the benefits significantly reduce that parent's personal living expenses.