In Indiana family law, accurately defining income is crucial for determining child support obligations. This process can be complex, as income for child support purposes often differs from what appears on tax returns. The courts will consider circumstances concerning your finances as it applies to your child support obligation. An experienced family law attorney can help you understand your child support obligations. This blog will break down the key components of income calculation for child support in Indiana.
Indiana uses gross income as the starting point for child support calculations. According to Indiana Child Support Guidelines, gross income includes wages and salaries; commissions, bonuses, and overtime pay; self-employment income; dividends and interest; pensions and retirement benefits; social security benefits; unemployment and workers’ compensation benefits; alimony or maintenance received from a previous marriage; and investment income. Courts may include irregular or non-guaranteed income, such as bonuses or overtime, in the child support calculation. Typically, they average this income over a reasonable period to determine its impact on support obligations.
For self-employed individuals, income calculation can be more complex. Courts generally use gross receipts minus ordinary and necessary expenses to determine income. However, they may scrutinize claimed business expenses to ensure they are legitimate and not personal expenses disguised as business costs. In cases where a parent is voluntarily unemployed or underemployed, the court may impute income based on their earning capacity. Factors considered include education, work history, and local job market conditions. Sometimes, non-monetary benefits that reduce personal living expenses may be counted as income. This could include employer-provided housing, meals, or vehicle use.
Certain types of income are typically excluded from child support calculations, such as means-tested public assistance; income of a new spouse; and gifts and inheritances (unless they produce income). While starting with gross income, Indiana law allows for certain deductions before calculating child support. Other child support obligations for children not part of the current case are considered for deductions. Alimony paid to a former spouse and health insurance premiums for children could qualify for deductions for child support. Also, the court will contemplate the variable income of the parents when calculating child support obligations. For parents with variable income (e.g., seasonal workers, commission-based salespeople), courts may use income averaging over a period of time to determine a fair representation of earnings. To accurately define income, parties may need to provide various financial documents, including tax returns, pay stubs, business financial statements, bank statements, and 1099 forms for independent contractors.
Ultimately, Indiana uses a broad definition of income for child support purposes. Courts have discretion in how they treat irregular income or self-employment earnings. Accurate financial documentation is crucial for proper income determination. Income for child support may differ significantly from taxable income. Understanding how Indiana defines income for child support purposes is essential for both parents and legal professionals involved in family law cases. Proper income calculations ensure fair child support determinations that accurately reflect each parent’s financial situation. The attorneys at Ciyou & Associates, P.C. have a strong background in child support matters throughout the state of Indiana. We are here to help you with your child support proceedings. This blog was written by attorneys at Ciyou & Associates, P.C., and this blog is not intended as specific legal advice or solicitation of services as this is an advertisement.