Child support is a pivotal aspect of family law, ensuring that children receive the necessary financial support from both parents. In Texas, the determination of child support largely hinges on the income of the parents. But what exactly constitutes “income” for the purpose of calculating child support in Texas?
1. Defining Income in Texas (§154.062)
The Texas Family Code, in §154.062, provides a comprehensive definition of income for child support purposes. Income includes:
- Wage and salary income
- Commissions, overtime pay, tips, and bonuses
- Interest, dividends, and royalty income
- Rental income (minus operating expenses)
- Self-employment income
- Severance pay, retirement benefits, pensions, trust income, annuities, and capital gains
- Social security benefits, workers’ compensation benefits, unemployment benefits, and disability and health insurance benefits
- Gifts, prizes, and alimony or maintenance received from persons other than the parties to the suit
From the total earnings, certain deductions are allowed, such as federal income tax, social security tax, and health insurance premiums for the child.
2. Non-traditional Sources of Income
Texas courts have grappled with non-traditional sources of income and how they should be treated for child support purposes:
- Non-recurring Income: Child support typically looks at regular income, but there are instances where parents might receive non-recurring income, such as bonuses or one-time sales. Texas courts have the discretion to include or exclude such income based on its recurrence and significance.
- Business Income: Business owners often have varied income streams and expenses. For child support purposes, the courts will look at gross receipts minus ordinary and necessary expenses to determine net business income.
- Gifts and Reimbursements: Gifts, especially substantial ones, can be considered as income. Similarly, reimbursements from employers, if they reduce personal expenses, can be counted as income.
- Retirement Withdrawals: Withdrawals from retirement accounts, while taxable, are not always considered income for child support purposes in Texas. However, the interest or appreciation from these accounts might be.
3. Imputed Income
If a parent is voluntarily unemployed or underemployed, Texas courts can assign or “impute” an income to that parent based on their employment potential, work history, qualifications, and prevailing job opportunities. This ensures that parents cannot evade child support obligations by intentionally reducing their income.
4. Income and Spousal Maintenance
In Texas, when determining child support, it’s essential to note that spousal maintenance can play a role. Maintenance received by a party is considered as part of their income, while maintenance paid can be deducted from the payer’s income.
Understanding what constitutes income in Texas for child support purposes is vital for both parents. It ensures that child support calculations are fair and in the best interest of the child.