Determining Income for Child Support in New Jersey

Learn more about how child support is determined in New Jersey.

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Judges awarding child support in New Jersey follow the current New Jersey Child Support Guidelines contained in Court Rule 5:6A and Appendix IX. New Jersey child support is based on the income of both parents. For an in-depth discussion of how courts set child support, see Child Support in New Jersey, by Susan Bishop.

Income Available for Support

Parents attempting to estimate a child support payment will first have to add up their combined “net income,” which is defined in the Guidelines as “gross income,” minus specific deductions.

Gross income includes most kinds of income, whether earned or unearned. Some examples are wages, tips, commissions, bonuses, rent, alimony, dividends, interest, self-employment income, unemployment insurance benefits, worker’s compensation, and retirement distributions.

A self-employed parent can deduct necessary costs of doing business from gross receipts, but a court will review these deductions closely and won’t allow everything the IRS would allow. For example, a business owner can’t deduct expenses for a home office, a company car, or business entertainment, and can deduct only limited amounts for depreciation and voluntary pension plan contributions.

A parent who will receive alimony after a final divorce from the other parent in the current case must include that amount in income, and the parent paying the alimony can subtract it from income.

Income also includes fringe benefits that reduce personal living expenses, such as housing, meals, or a car; but it doesn’t include “means-tested” public assistance benefits with eligibility requirements based on low-income and limited resources, such as Temporary Assistance to Needy Families (TANF), Supplemental Security Income (SSI), or food stamps. Parents with very low income may also be able to exclude all or part of their income to ensure that they keep enough to meet their own minimum support needs.

Appendix IX-B of the guidelines identifies various types of income as either gross income or excluded income. Just because an item isn’t specifically identified on the list as gross income, however, doesn’t mean that a court won’t include it. The test is whether or not an ordinary two-parent family living in one household would be likely to use the income for child-related expenses.

Fluctuating Income

If income goes up and down due to factors like seasonal variations or irregular receipt of commissions or bonuses, a court can average previous income over time, generally for a maximum of 36 months. If the income is unlikely to continue into the future, a parent can ask the court to disregard it.

Imputed Income

If there’s evidence that either parent is intentionally unemployed or underemployed, a judge can estimate income available for child support based on the parent’s actual earning ability, after considering factors such as former income and occupation, work experience, education, training, and available jobs in the area.

Without specific information about earning ability, a judge might assume that a parent could work a 40-hour week and earn at least New Jersey minimum wage. A judge won’t impute income to a parent with a good reason for unemployment or underemployment, such as a disability or a very young or special needs child at home. A parent who has to care for young children is also entitled to an offset against any imputed income for child-care expenses the parent would need to work.

Taxable and Non-Taxable Income 

The Guidelines provide various methods for calculating a withholding allowance to account for payment of combined federal, state, city, social security, and Medicare taxes. For this reason, parents completing worksheets must separate any non-taxable income, such as worker’s compensation benefits, from their taxable income.

Deductions from Gross Taxable Income

The Guidelines limit deductions from gross taxable income to the combined tax withholding allowance, mandatory union dues or mandatory non-taxable retirement contributions, court-ordered alimony payments, and any amount that a parent pays for children of other relationships, including both child support payments for biological or adopted children under 18, and an allowance for support of any such children that live with the parent (called an “other-dependent” deduction). A parent who wishes to claim the other-dependent deduction must provide the court with the income of the other parent in the “alternate” family and complete three separate parenting worksheets: one for the current case with the deduction, one without the deduction, and one for the alternate family.

Verifying Income

Both parents in a child support case must submit either a Case Information Statement or a Financial Statement in Summary Support Actions (depending on the type of case), with complete supporting documents, including federal and state tax returns, W-2’s, 1099’s, or other documents verifying income.

A judge hearing a case before June 30th of any calendar year will generally set a child support amount primarily on verified income from the preceding year. A judge hearing a case after June 30th will attempt to use year-to-date information, such as paystubs, employer wage verifications, or statements of business receipts and expenses for the current year.

Judges awarding child support in New Jersey follow the current New Jersey Child Support Guidelines contained in Court Rule 5:6A and Appendix IX. New Jersey child support is based on the income of both parents. For an in-depth discussion of how courts set child support, see Child Support in New Jersey, by Susan Bishop.

Income Available for Support

Parents attempting to estimate a child support payment will first have to add up their combined “net income,” which is defined in the Guidelines as “gross income,” minus specific deductions.

Gross income includes most kinds of income, whether earned or unearned. Some examples are wages, tips, commissions, bonuses, rent, alimony, dividends, interest, self-employment income, unemployment insurance benefits, worker’s compensation, and retirement distributions.

A self-employed parent can deduct necessary costs of doing business from gross receipts, but a court will review these deductions closely and won’t allow everything the IRS would allow. For example, a business owner can’t deduct expenses for a home office, a company car, or business entertainment, and can deduct only limited amounts for depreciation and voluntary pension plan contributions.

A parent who will receive alimony after a final divorce from the other parent in the current case must include that amount in income, and the parent paying the alimony can subtract it from income.

Income also includes fringe benefits that reduce personal living expenses, such as housing, meals, or a car; but it doesn’t include “means-tested” public assistance benefits with eligibility requirements based on low-income and limited resources, such as Temporary Assistance to Needy Families (TANF), Supplemental Security Income (SSI), or food stamps. Parents with very low income may also be able to exclude all or part of their income to ensure that they keep enough to meet their own minimum support needs.

Appendix IX-B of the guidelines identifies various types of income as either gross income or excluded income. Just because an item isn’t specifically identified on the list as gross income, however, doesn’t mean that a court won’t include it. The test is whether or not an ordinary two-parent family living in one household would be likely to use the income for child-related expenses.

Fluctuating Income

If income goes up and down due to factors like seasonal variations or irregular receipt of commissions or bonuses, a court can average previous income over time, generally for a maximum of 36 months. If the income is unlikely to continue into the future, a parent can ask the court to disregard it.

Imputed Income

If there’s evidence that either parent is intentionally unemployed or underemployed, a judge can estimate income available for child support based on the parent’s actual earning ability, after considering factors such as former income and occupation, work experience, education, training, and available jobs in the area.

Without specific information about earning ability, a judge might assume that a parent could work a 40-hour week and earn at least New Jersey minimum wage. A judge won’t impute income to a parent with a good reason for unemployment or underemployment, such as a disability or a very young or special needs child at home. A parent who has to care for young children is also entitled to an offset against any imputed income for child-care expenses the parent would need to work.

Taxable and Non-Taxable Income 

The Guidelines provide various methods for calculating a withholding allowance to account for payment of combined federal, state, city, social security, and Medicare taxes. For this reason, parents completing worksheets must separate any non-taxable income, such as worker’s compensation benefits, from their taxable income.

Deductions from Gross Taxable Income

The Guidelines limit deductions from gross taxable income to the combined tax withholding allowance, mandatory union dues or mandatory non-taxable retirement contributions, court-ordered alimony payments, and any amount that a parent pays for children of other relationships, including both child support payments for biological or adopted children under 18, and an allowance for support of any such children that live with the parent (called an “other-dependent” deduction). A parent who wishes to claim the other-dependent deduction must provide the court with the income of the other parent in the “alternate” family and complete three separate parenting worksheets: one for the current case with the deduction, one without the deduction, and one for the alternate family.

Verifying Income

Both parents in a child support case must submit either a Case Information Statement or a Financial Statement in Summary Support Actions (depending on the type of case), with complete supporting documents, including federal and state tax returns, W-2’s, 1099’s, or other documents verifying income.

A judge hearing a case before June 30th of any calendar year will generally set a child support amount primarily on verified income from the preceding year. A judge hearing a case after June 30th will attempt to use year-to-date information, such as paystubs, employer wage verifications, or statements of business receipts and expenses for the current year

Updated by: Kyle Vanderneut

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