Types of Income Included When Calculating Child Support in Texas

Calculating child support in Texas is supposed to a relatively simple procedure using a state-specified formula, which includes the paying spouse’s net income. However, it can get a little tricky given the fine print regarding what types of income are included, what types of income are exempt, and what types of deductions you can make.

Types of Income Included in the Child Support Equation

Texas Family Code Section 154.062 explains in detail what types of resources are included in a child support case.

The net resources that the court will use when determining liability for support include: 

• rental income;
• severance pay;
• trust income;
• wages and salary  income;
• commissions, overtime pay, tips, and bonuses;
• interest, dividends, and royalty income;
• self-employment income;
• retirement benefits and pensions received;
• annuities and capital gains;
• Social Security benefits other than Supplemental Security Income;
• unemployment benefits;
• disability and workers’ compensation benefits;
• gifts and prizes; and
• spousal maintenance and alimony.

If a parent is unemployed, the courts will impute income based on a minimum wage, 40-hour week. Likewise, if the courts feel a parent is underemployed, i.e., not working to his or her full earning potential, the courts may impute income based on earning potential, not actual income.

Income Not Included

If the paying parent is married, his or her spouse’s income is not calculated into the equation.Other income not considered income in a child support case includes:

• return of principal or capital;
• accounts receivable;
• welfare, food stamps, WIC, or any other federal public assistance program benefits; or
• payments for foster care of a child.

Deductions from Income that Texas Law Allows

When determining child support obligations, the courts will deduct several types of expenses from the paying spouse’s net income. Any expenses the paying spouse might have to a spouse or to stepchildren are not deductible.

The deductions the law allows include:

• Social Security taxes;
• federal income tax (based on the tax rate for one personal exemption with the standard deduction);
• state income tax;
• union dues;and
• expenses for the cost of health insurance.

In terms of yearly taxes, if your child lives with you then you are considered the “Head of the Household” and your credits depend on whether your ex-spouse has agreed to waive the ability to claim the child as an exemption. When you are the one claiming the exemption then you are the one claiming child-related credits.

Make Sure Your Figures are Correct Before Signing Any Agreement

When you and your ex are completing your financial affidavits and trying to reach an agreement on support, it’s important to make sure all your figures are correct. It’s both time consuming and expensive to have to request the court to modify an agreement once a child support order has already been finalized.

To help calculate support and ensure the payments are fair, have a lawyer look over your case. Not only can an attorney ensure your figures are accurate, but he or she can also help investigate if you suspect your ex may be underreporting income. For an attorney in Dallas, contact the Law Office of Julie Johnson, PLLC. Call us today at (214) 290-8001 for a consultation.