Child support and unrealized income

On Behalf of | Jan 19, 2017 | Good Fortune Child Support |

For the purposes of calculating child support payments, the concept of “income” is often defined just about as broadly as possible. This can create a tricky situation for the parent who is being tasked with providing regular child support, especially when in comes to the matter of unrealized income and child support. In these cases, income that exists in theory or on paper, but is not in a liquid form, may be counted as income for child support purposes, and increase the providing parent’s child support obligation to an untenable figure. After all, making a monthly payment based on money you don’t actually have or cannot access can be quite the setback.

There are some cases where potential income may be considered real income for child support purposes. These may include things like the interest accruing in an Individual Retirement Account, retained earnings from a business relationship or potential income from stock options you have not yet exercised.

In certain cases, a judge may decide that these kinds of assets may be considered income when calculating how much you are obligated to pay in child support. It is crucial to have excellent legal representation who can help create a fair child support plan that reflects your actual ongoing income. While no one would suggest that your child should not be well-taken care of, it is also not fair to be fleeced by the system simply because you have more assets on paper than in practice.

In some rare cases, you may even face the prospect of child support being calculated using “fictional” income — income that you report to the Internal Revenue Service, but do not personally receive, which is common in some types of estate planning. It is absolutely vital that you protect yourself from being penalized by a court for being savvy in your finances.

With the guidance of an experienced attorney, you can approach your child support obligation without fear. Of course, the child you love and care for will remain at the center of the process, ensuring that your rights remain protected and the child in question receives all that he or she needs and is entitled to.

Source: FindLaw, “Child Support: Determining Parents’ Income,” accessed Jan. 19, 2017