by W. Lee Allen III, Colombo-Kitchen Attorneys
As they spend money on friends and family for holiday gift-giving and events, parents often wonder if the amount of child support they receive is correctly calculated. How do child support guidelines really work?
There are three guideline “worksheets.” Think of “worksheet” meaning “formula.” Worksheet A is the most common and will be used here for illustrative purposes. It applies when the non-custodial parent has the child(ren) for less than 123 overnights (per child if more than one) per year. If the non-custodial parent has each child for 123 or more over nights per year, Worksheet B is used. If there is more than one child and each party is the primary custodian for at least one of their children, then Worksheet C is used.
In North Carolina, the gross incomes of the parents become the first factor. Clients will often express surprise that net income is not used and disagree, but North Carolina uses gross income. Gross income means “income before any deductions are credited.”
Specifically, gross income is defined as income from all sources, including social security benefits (received for the benefit of a child as a result of the retirement or disability of one of the parents). However, any governmental benefits that a parent receives that are means-tested public assistance are excluded from the definition of gross income. Thus, food stamps and SSI benefits, among others, are not included.
Self-employed parents or parents who operate a business have their incomes defined as “gross receipts minus ordinary and necessary business expenses.” North Carolina law allows “straight-line” depreciation as an ordinary and necessary expense, while accelerated depreciation is not allowed.
If an employer pays certain expenses for a parent, reimburses certain expenses of a parent, or makes certain in-kind payments (car, housing, etc.,) then these amounts can be included in a parent’s income for child support purposes, to the extent that they reduce personal living expenses.
The current gross income for each parent is calculated on a monthly basis. Tax returns can help shed light on the current figure, but the law requires a determination of current income.
After the current gross income of each parent is determined, certain adjustments are to be considered. A parent who pays pre-existing child support (pursuant to an agreement or a court order) for any other child has that amount deducted from his or her income.
Likewise, a parent also gets credit for any other minor child (who is not the child of the other) who lives with him or her. Logically, a child living with a parent imposes a financial obligation on that parent and thus reduces the amount of money that parent has available for other purposes each month.
Each of the parents’ monthly adjusted gross income is determined by applying either or both of these credits to the monthly gross income for each. The total monthly adjusted gross income for both parents is then used to determine the parents’ basic child support obligation by using the schedule of basic child support obligations as determined by the North Carolina Conference of Chief District Court Judges.
For example, if the monthly adjusted gross income of the father is $6000 and the monthly adjusted gross income of the mother is $5000, then the monthly basic child support obligation for one child is $1094, using the current guidelines.
Then, to the basic monthly child support obligation of each parent, additional adjustments are made. There are three types of such adjustments.
Work-related child care adjustments paid by a parent are added to the basic child support obligation. Below certain income levels, 100% is added to the basic monthly child support obligation.
The monthly amount(s) paid by a parent (or parents) for medical and dental insurance for the minor child(ren) at issue in the case is added to the basic child support obligation.
Any “extraordinary” expense that a parent incurs for the children is calculated on a monthly basis and an adjustment is appropriate if the expense is necessary, reasonable, and in the child’s best interests. Examples include private school tuition, specialized instruction/ lessons, etc.
Each parent’s pro-rata share of the total monthly adjusted gross income is then applied to the adjusted child support obligation, and a final credit is given to the non-custodial parent for his or her work-related child care expenses, the amount of medical and dental insurance premiums paid for the child(ren) and his or her extra-ordinary expenses paid on the child(ren)’s behalf. The resulting figure is the non-custodial parent’s child support obligation each month.
For more information, visit Colombo Kitchin Attorneys online at www.ck-attorneys.com or call 252.321.2020. Offices are located at 1698 East Arlington Boulevard, Greenville, NC and 130 East Second Street, Washington, NC.