One of the most common questions divorcing couples share is, what kind of income is used to determine alimony and child support in New Jersey? NJ courts calculate both alimony and child support using both spouses’ gross income, which can come from any of these sources:
- Compensation for services, including: wages, fees, tips, and commissions;
- The operation of a business minus ordinary and necessary operating expenses;
- Gains derived from dealings in property;
- Interest and dividends;
- Rents (minus ordinary and necessary expenses);
- Bonuses and royalties;
- Alimony and separate maintenance payments received from the current or past relationships;
- Annuities or an interest in a trust;
- Life insurance and endowment contracts;
- Distributions from government and private retirement plans including Social Security, Veteran’s Administration, Railroad Retirement Board, deferred compensation, Keoghs and IRAs;
- Personal injury awards or other civil lawsuits;
- Interest in a decedent’s estate or a trust;
- Disability grants or payments (including Social Security disability);
- Profit sharing plans;
- Workers’ compensation;
- Unemployment compensation benefits;
- Overtime, part-time, and severance pay;
- Net gambling winnings;
- The sale of investments (net capital gain) or earnings from investments;
- Income tax credits or rebates (excluding the federal and state Earned Income Credit and the New Jersey homestead rebate);
- Unreported cash payments (if identifiable);
- The value of in-kind benefits; and
- Imputed income.
If both spouses are employed, determining gross income for each is fairly straightforward. However, it can get complicated if incomes fluctuate because a salary is supplemented with commissions or bonuses based on performance, or if one spouse is unemployed.
If one spouse is unemployed — either voluntarily or temporarily — then the court will typically impute an income for that spouse based on prior employment history, education, earning capacity, etc.
In situations where a spouse’s income fluctuates, the court may average his or her annual income from all sources over a period of three to five years and use that average to calculate alimony and child support. For the payer spouse, this method may not be ideal since it relies partially on discretionary income that may or may not be received.
If negotiating a fair settlement for both parties is your goal, you will need the assistance of an experienced New Jersey divorce attorney. Protecting your interests and achieving results that support your needs is what you can expect from Murphy & Cistaro. Contact us today for your free consultation