How Is Income Measured for the Purpose of Calculating Child Support in Illinois?

 Posted on July 03, 2019 in Illinois Divorce

Since Illinois switched to the “income shares” method in 2016, child support payments are calculated based on the combined net income of both parents. When both parents have a job that pays a straight salary or hourly wage, the calculation of net income is fairly straightforward. The calculation can be far more complicated, however, when a parent is self-employed, retired, has a child support obligation from a previous marriage, or has some other special situation

The Definition of Net Income for Illinois Child Support Calculations

Illinois child support law (750 ILCS 5/505), in combination with various court rulings, defines income for the purpose of child support calculations as follows

Net income includes all income from all sources, broadly defined by the courts as “a gain or recurrent benefit” that “enhances a parent’s wealth and facilitates that parent’s ability to support a child.” This specifically includes:

• Income from wages, salary, commissions, and bonuses, including pre-tax income deposited into a 401(k) savings plan or similar retirement plan.

• “Net business income” Income from self-employment, royalties, rent received from rental properties, or the operation of a business. “Net business income” means gross receipts minus ordinary and necessary expenses.   

• Investment income such as stock dividends, bond interest payments, and capital gains on the sale of securities.

• Pensions and distributions from IRAs.

• Social Security retirement and disability income; however, the parent will receive a credit toward their child support obligation for the amount of the child’s separate benefit.

• Distributions from a trust.

• Lump-sum workers’ compensation awards

• That part of a personal injury compensation award designated as compensation for lost earnings.

• Gifts or inheritances from parents, including a settlement for the wrongful death of a parent.

• Military housing allowances.

• Severance pay.

• Deferred compensation payments.

• Employment-related perks or allowances that are significant and that reduce the parent’s personal expenses, such as a company car, free housing, or a housing allowance.

• Maintenance payments received, whether from the subject child’s parent or from a different marriage.

Net income excludes the following:

• That part of income that went to pay federal income tax, state income tax, Social Security or self-employment tax (or, if none, mandatory retirement contributions), and Medicare tax.  

• Benefits received from means-tested public assistance programs, such as Supplemental Security Income (SSI) provided to someone with a disability.

• Child support, survivor benefits, or foster care payments received by the parent for other children in the household.

• Maintenance payments made to a former spouse.

• Child support payments for children from a separate relationship, known as the multi-family adjustment.

Consult an Elite St. Charles Child Support Lawyer

If you are concerned about how either parent’s income will be calculated for the purpose of calculating child support, seek advice from a St. Charles divorce lawyer. The attorneys of Weiler & Associates, Inc. are well-versed in the complexities of child support calculations, including those for high income and high net worth individuals. Call 630-331-9110 to schedule a consultation

Sources:

http://www.ilga.gov/legislation/ilcs/documents/075000050K505.htm

http://www.illinoiscourts.gov/Opinions/AppellateCourt/2016/5thDistrict/5150246.pdf