In Illinois, the calculation of child support is largely based on the parent’s net income. Net income is derived from various sources, with specific deductions applied to determine the actual amount available for child support. The 750 ILCS 5/505(a)(3)(B), gives a direct definition of net income stating that, “‘net income’ means gross income minus either the standardized tax amount calculated or the individualized tax amount calculated and minus any adjustments.” Below is an overview of what falls under the category
of net income:
Sources of Income
Net income encompasses all earnings from various sources, including:
- Wages and Salaries: This includes regular pay, overtime, bonuses, and commissions.
- Self-Employment Income: Earnings from a business or freelance work, after deducting legitimate business expenses
- Investment Income: Income from investments such as dividends, interest, and capital gains.
- Rental Income: Profits from rental properties, after accounting for expenses like maintenance and property taxes.
- Retirement Benefits: Pensions, Social Security benefits, and withdrawals from retirement accounts.
- Other Sources: Income from sources such as unemployment benefits, disability payments, alimony, and personal injury settlements.
Deductions from Gross Income
To calculate net income, certain deductions are made from the gross income, which includes:
- Federal and State Taxes: Income taxes owed to federal and state governments.
- Social Security and Medicare: Contributions to Social Security and Medicare.
- Mandatory Retirement Contributions: Required contributions to retirement plans, such as those for government employees.
- Union Dues: Union membership dues, if applicable.
- Health Insurance Premiums: Payments for health insurance, especially those covering the child.
- Prior Child Support or Maintenance: Court-ordered support payments for other children or former spouses.
Inclusions and Adjustments
Certain types of income and adjustments are important in net income calculations:
- Regular Gifts and Bonuses: Substantial and consistent gifts or bonuses can be included.
- Non-Recurring Income: Occasional income like personal injury awards or workers’ compensation may be considered, especially if it represents lost income.
- Imputed Income: If a parent is voluntarily unemployed or underemployed, the court may impute income based on their earning capacity.
Considerations for Business Owners
For self-employed parents or business owners, net income is calculated after subtracting necessary and reasonable business expenses. However, personal expenses disguised as business expenses, excessive deductions, or non-essential costs may be scrutinized. Courts ensure that only legitimate and directly related business expenses are deducted.
Transparency and Documentation
Accurate documentation and transparency are essential. Parties must provide thorough records, which may include financial statements, tax returns, and pay stubs, to ensure that the court can make informed decisions. Misreporting or hiding income can lead to unfair child support calculations and legal consequences.
In conclusion, net income in Illinois child support calculations includes a wide range of income sources, adjusted by specific deductions to reflect the parent’s true financial capacity. Understanding these components ensures fair and accurate support determinations, prioritizing the child’s best interests. If you need help with pursuing or defending your Illinois child support lawsuit please click the link below contact our Chicago office and speak with one of our experienced family law attorneys https://jacobsonlegalservices.com/!
