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What income is used to calculate child support?

One of the factors that is necessary to calculate child support is income. The word "income" is described differently in the Michigan Child Support Formula Manual than it is in the IRS Code. Some items that are not income for tax purposes may be considered income for child support calculation purposes.

Income for child support calculation could mean, but is not limited to:

  • (a) All W-2 income with no deduction for contributions to 401k or company savings plans or 402b or simple IRAs.

  • (b) Distributions from pass through entities like Sub chapter S corporations or LLCs and the like.

  • (c) Overtime pay. Overtime pay is usually found in the gross wages of a W-2. However one comment about overtime pay that needs to be noted. If you are an employee that works for a employer that has over time available and your regular hours are 35 or more, the court cannot force you to take the overtime. If your regular work week is less than 35 hours the court can input to you overtime that is available up 35 hours total. If you work overtime it is included.

  • (d) Interest from any source. Even tax exempt interest is included in the calculation.

  • (e) Dividends from any source.

  • (f) Imputed income. If you are not fully employed or not employed and there is no reason why you are not fully employed the court can impute to you income in an amount that your experience tells the court that you have earned in the past. The least amount that the court will impute is 35 hours of minimum hourly wage per week.

  • (g) If you have investments that do not earn profits for you, such as vacant land, non dividend stock, valuable assets that earn money if invested differently the court can impute an income to those investments to calculate child support.

  • (h) If you are under employed. That is employed at less than your abilities the court can impute to you what you could have earned.

  • (i) If your relatives gift money to you on a regular basis the court can use these gifts as income to calculate child support.

  • (j) Social Security is income for child support calculation as are payments from pension plan, and some disability plans,

  • (k) Excessive depreciation taken on business property can be denied as only a reasonable depreciation applies. Reduction of the depreciation increases gross income for the child support.

  • (l) Depreciation on real estate taken for tax purposes is added back to income for child support calculation.

  • (m) Deduction for home office expenses are added back into income

  • (n) Alimony received is income for child support calculations if it comes from a prior relationship. Not the parent of the child support recipient.

  • (o) Undistributed income in a business entity that has no valid reason to remain in the entity is income for child support purposes.

  • (p) Reimbursements for travel expenses and per diem from an employer that exceeds actual costs incurred is income for child support.

This description of "income" for child support purposes is not exhausted above. As new situations come before the Court, new items could be considered income for child support calculation purposes.

If you're facing child support issues, schedule a consultation today at 269-381-4471.


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