What Constitutes Income for Child Support Purposes?
Parties to a dissolution of marriage action with children will need to calculate a child support amount to be paid by the obligor consistent with C.R.S. § 14-10-115.
How is Child Support Calculated in Colorado?One of the most common questions clients ask is: How will child support be calculated by the Court? Child support in Colorado is governed by statutory guidelines contained in C.R.S. 14-10-115. However, this statute is constantly being revised and adjusted for things like inflation and parties are well-advised to ensure they have the most current version of the statute. The child support guidelines in Colorado are presumptive, opposed to Colorado's spousal maintenance guidelines, which are merely advisory. The child support guidelines calculate child support based upon the parents' combined adjusted gross income estimated to have been allocated to the child if the parents and children were living in an intact household. Additionally, the child support guidelines adjust the child support based upon the needs of the children for extraordinary medical expenses and work-related child care costs, and allocate the amount of child support to be paid by each parent based upon physical care arrangements.
How to Determine the Parents' Incomes for a Child Support Calculation.Courts will use each parent's "gross income" to calculate the child support amount. "Gross income," as it is defined by the statute, and includes, but is not limited to:
(1) Income from salaries;
(2) Wages, including tips declared by the individual for purposes of reporting to the federal internal revenue service or tips imputed to bring the employee's gross earnings to the minimum wage for the number of hours worked, whichever is greater;
(4) Payments received as an independent contractor for labor or services, which payments must be considered income from self-employment;
(7) Severance pay;
(8) Pensions and retirement benefits;
(12) Trust income;
(14) Capital gains;
(15) Any moneys drawn by a self-employed individual for personal use that are deducted as a business expense, which moneys must be considered income from self-employment;
(16) Social security benefits, including social security benefits actually received by a parent as a result of the disability of that parent or as the result of the death of the minor child's stepparent but not including social security benefits received by a minor child or on behalf of a minor child as a result of the death or disability of a stepparent of the child;
(17) Workers' compensation benefits;
(18) Unemployment insurance benefits;
(19) Disability insurance benefits;
(20) Funds held in or payable from any health, accident, disability, or casualty insurance to the extent that such insurance replaces wages or provides income in lieu of wages;
(21) Monetary gifts;
(22) Monetary prizes, excluding lottery winnings not required by the rules of the Colorado lottery commission to be paid only at the lottery office;
(23) Income from general partnerships, limited partnerships, closely held corporations, or limited liability companies. However, if a parent is a passive investor, has a minority interest in the company, and does not have any managerial duties or input, then the income to be recognized may be limited to actual cash distributions received;
(24) Expense reimbursements or in-kind payments received by a parent in the course of employment, self-employment, or operation of a business if they are significant and reduce personal living expenses;
(25) Alimony or maintenance received; and
(26) Overtime pay, only if the overtime is required by the employer as a condition of employment.
There are many forms of income, which are exceptions to the "gross income" definition under the statute. Parties to a divorce proceeding should meet with a licensed Colorado family law attorney to discuss the specifics of their case, and obtain legal advice in order to make an informed decision on this issue.