What Income Counts Towards Child Support Obligations?

A common misperception in divorce cases has to do with what income is considered when determining child support. Some people believe it is the amount of their paycheck which is determinative. Others ask whether the value of certain assets, like a home, may be considered.

Tennessee law requires the “gross” income of the parties be considered in setting child support. This means that a person’s income before tax deductions and other deductions, such as credits for qualified children, retirement, etc., are taken out of a paycheck. Thus, one starts with the actual payment amount, i.e., the person’s salary, rather than the net take-home pay.

That is not all. The definition of gross income does not only include wages and salaries. In fact, the definition of gross income for purposes of child support in Tennessee is extremely expansive. It includes – but is not limited to – money a person may receive from the following:

  • Commissions, fees, and tips;
  • Income from self-employment;
  • Bonuses;
  • Overtime pay;
  • Severance pay;
  • Pensions or retirement plans including but not limited to Social Security, Veterans Affairs Department, Railroad Retirement Board, Keoghs, and individual retirements accounts (“IRAs”);
  • Interest income;
  • Dividend income;
  • Trust income;
  • Annuities;
  • Net capital gains;
  • Disability or retirement benefits that are received from the Social Security Administration pursuant to Title II of the Social Security Act or from the Veterans Affairs Department, whether paid to the parent or to the child based on the parent’s account;
  • Workers’ compensation benefits, whether temporary or permanent;
  • Unemployment insurance benefits;
  • Judgments recovered for personal injuries and awards from other civil actions;
  • Gifts that consist of cash or other liquid instruments or which can be converted to cash or which can produce income such as real estate, or which reduces a parent’s living expenses such as housing paid by others, in whole or in part;
  • Inheritances that consist of cash or other liquid instruments or which can be converted to cash or which can produce income, such as real estate;
  • Prizes;
  • Lottery winnings;
  • Alimony or maintenance received from persons other than parties to the proceeding before the tribunal; and
  • Actual income earned during incarceration by an inmate.

As seen from the above, the sources of income that make up gross earnings for child support are quite broad in Tennessee. It is a mistake, therefore, for someone to just look at their take-home paycheck and think that is all that will be considered.

Certain payments may be excluded from gross income, as well. They include the following:

  • Child support payments received by either parent for the benefit of children of another relationship;
  • Benefits received from means-tested public assistance programs such as but not limited to Families First, Supplemental Nutrition Assistance Program (also known as food stamps), Supplemental Security Income under Title XVI of the Social Security Act, Federal Benefits for Disabled Children of Deceased Disabled Workers and Low-Income Heating and Energy Assistance Payments; and
  • The child’s income from any source, including but not limited to trust income and Social Security benefits drawn on the child’s disability; and adoption assistance subsidy under Tennessee or another state’s law.

In conclusion, ensuring one has all the wage income from the other spouse may be pivotal,  regarding an appropriate computation of child support. It is critical to ask the right questions and include the correct income before determining the appropriate child support payment amount.

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Family Law

About the Author:

Stuart Scott is a litigation attorney with over 25 years of experience. He has tried hundreds of cases in both state and federal court. Some of his noteworthy victories have been featured in local, state and national publications. Stuart is also listed as a Tennessee Supreme Court Rule 31 Family Law Mediator. Stuart focuses his primary area of practice on family law. He represents people going through divorce and focuses his efforts on providing his legal services and advice to his clients in this area. Mr. Scott may be reached in our Nashville office at 615-620-1710 or sscott@dickinsonwright.com.