Why Is Gross Income & Not Net Income Used for Child Support Payments?

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Child support is based on a percentage of net income.
Child support is based on a percentage of net income. (Image: Photos.com/Photos.com/Getty Images)

Child support is a legally determined amount the non-custodial parent pays to the custodial parent to provide support for their child or children. Child support is determined by a formula that is based on an individual's net income rather than an individual's gross income. The amount of child support changes as the circumstances evolve for the children and both parents. Individuals must petition the court to change the amount of child support.

What is an Individual's Gross Income?

Gross income is defined as an individual’s total income before taxes or deductions are determined and subtracted. This number is the response you typically would give if someone were to ask how much you earn in a year. An individual’s gross income is not calculated as an individual’s taxable income as that includes a variety of sources, but does not include gifts, inheritances, certain federal benefits or tax-free interest earned from bonds.

What is an Individual's Net Income?

To determine an individual’s net income, you must first start with the individual’s gross income. From that number, you subtract the amount equal to that individual’s income and Social Security taxes, health insurance premiums for his children and union dues.

What is Used to Determine Child Support Payments?

Gross income is not used to determine child support payments; a court applies a formula to an individual's net income. Once an individual’s net income is determined, a court applies a formula to determine the percentage of net income that will be allocated to child support. Since net income is a number closer to the individual’s take-home pay and would represent the amount that would be available to provide support for his children, gross income is the figure used to determine child support payments.

Common Child Support Formulas

Courts apply child support formulas to the first $6,000 of an individual’s net income for each month. The common percentages used by courts in setting child support is 20 percent for a single child, 25 percent for two children that are in one parent’s custody and 17.5 percent for each child if there are two children under both parents’ custody.

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