One of the most frequently asked questions in the family law context concerns the calculation of child support. To calculate child support in Texas, the law provides a three-step process:
1. Determine “net resources”
2. Apply the child support guidelines to the “net resources” to determine the amount of support
3. Consider any other factors that might justify deviating from the guidelines and adjust the support as appropriate
The focus of this blog post will be on the calculation of “net resources,” which is often the most confusing issue among the three steps listed above. So, how does one calculate “net resources?”
To arrive at “net resources,” the starting point is a determination of all income earned on an annual basis (“gross income”). This amount includes wage and salary income, self-employment income, severance pay, retirement pay, social security benefits, unemployment benefits, disability and workers’ compensation benefits, alimony, child support, net rental income, interest income, capital gains, trust distributions, annuity income, gifts, prizes and all other sources of income.
Next, the court will subtract certain items. The most common deductions include federal income taxes, social security taxes, and the cost of the child’s health insurance, i.e., his/her premiums. It is important to note that the figure used for federal income taxes is not always the exact amount paid, but rather, the rate for a single person claiming one personal deduction, as well as the standard deduction.
After taking the appropriate deductions, divide by 12 to arrive at the “monthly net resources.” This completes step one of the process of calculating child support.
We’ll address step two in our next blog post.