NRS 125B.070(1)(a) used to define “gross monthly income” as “the total amount of income received each month from any source of a person who is not self-employed or the gross income from any source of a self-employed person, after deduction of all legitimate business expenses, but without deduction for personal income taxes, contributions for retirement benefits, contributions to a pension or for any other personal expenses.”
On October 30, 2019, the Approved Regulation of the Administrator of the Division of Welfare and Supportive Services of the Department of Health and Human Services, LCB File No. R183-18 was filed. This regulation, which completely overhauled the previous child support guidelines, went into effect on February 1, 2020. The new regulations are contained in the Nevada Administrative Code, at Chapter 425.
Along with significant changes to the way child support is calculated and the elimination of the presumptive maximum cap, section 4 of the new regulation also more clearly defined (and, arguably, expanded) the definition of “gross monthly income” for the calculation of child support. The following is a summary of each type of income that the statute specifically mentions:
(a) Salary and wages, including, without limitation, money earned from overtime pay if such overtime pay is substantial, consistent and can be accurately determined.
The “salary and wages” portion of this is, of course, straightforward. The gross income a parent is paid by an employer or as an independent contractor is counted as income for child support purposes. But what if a parent regularly works overtime? What if that overtime substantially increases their gross pay?
The regulation states that overtime pay is included in gross monthly income if that pay is “substantial, consistent and can be accurately determined.” Though it came out long before the new obligation, this is consistent with Nevada’s prior case law. In Scott v. Scott, 107 Nev. 837, 822 P.2d 654 (1991), abrogated on other grounds by Rivero v. Rivero, 125 Nev. 410, 216 P.3d 213 (2009), the Nevada Supreme Court that overtime should be included as income for child support “if it is substantial and can be determined accurately.”
While there has not yet been any case law concerning “overtime” as defined by the new regulation in Nevada, the definition in the new regulation appears to be on par with other states. For example, the Supreme Court of Iowa found that where a father’s overtime was continuous, mandatory, and there was a strong likelihood he would continue to receive it in the future, it should be included in his income for child support. In re Marriage of Brown, 487 N.W.2d 331 (Iowa 1992). Similar decisions have come out of Minnesota, Mississippi, Montana, Nebraska, South Dakota , West Virginia, and other states. Courts have consistently found that where overtime is regular and expected.
(b) Interest and investment income, not including the principal.
Investment income is what is earned via interest payments, dividends, etc. This typically takes the form of interest earned on a large amount in a bank account or dividends received from stock.
(c) Social security disability benefits and old-age insurance benefits under federal law.
Under federal law, typically “SSI,” or Supplemental Security Income disability payments cannot be garnished for child support, as these payments are made to individuals with a low income. Those who receive “SSDI,” or Social Security Disability Insurance payments, however, are still liable for child support.
In Metz v. Metz, 120 Nev. 786 (2004), the federal law concerning different types of social security income and how it applies to child support was discussed. The court noted that Congress expressly exempted SSI from child support payments, so SSI payments cannot be counted as income for child support. Congress waived the exemption for SSDI payments, so those may be considered as income. The guideline also mentions old-age insurance benefits under federal law.
(d) Any periodic payment from a pension, retirement plan or annuity which is considered renumeration for employment.
Under the guidelines, periodic payments from a retirement fund “considered renumeration for employment” are counted as income. This means, for example, if you worked in the public sector, retired, and began collecting monthly PERS payments, that payment amount would be considered income for child support purposes. The guidelines does specify, however, that periodic payments for an annuity should be for “renumeration for employment” to be considered income. If, for example, that annuity was for a personal injury award but for pain and suffering and not to make up lost income, it would not be considered income for child support.
(e) Net proceeds resulting from workers’ compensation or other personal injury awards intended to replace income.
The amount of money a person receives from a workers’ compensation suit, or a personal injury suit for lost wages is counted as income for child support. The net proceeds are what is counted, meaning the amount paid to the individual after attorney’s fees, medical expenses, legal costs, etc. are paid.
(f) Unemployment insurance.
If a parent obligated to pay child support becomes unemployed and is able to collect unemployment benefits, those payments count as income for child support.
(g) Income continuation benefits.
Some employers offer income continuation insurance or benefits in the event an individual becomes disabled or otherwise unable to work. Typically, these benefits will comprise a certain percentage of that individual’s monthly earnings. These payments are considered income for child support because they are intended to replace income in the event of a major illness, injury, or disability.
(h) Voluntary contributions to a deferred compensation plan, employee contributions to an employee benefit or profit-sharing plan, and voluntary employee contributions to any pension or retirement account, regardless of whether the account provides for tax deferral or avoidance.
Voluntary contributions to a retirement, employee benefit, or profit-sharing plan are counted in gross income when calculating child support. This is likely to prevent a parent obligated to pay child support from unreasonably increasing their retirement plan contributions in order to lower their income and try to decrease their child support obligation.
(i) Military allowances and veterans’ benefits.
Income received from military service and military retirement payments received after military service are considered income for child support. Many jurisdictions include VA disability benefits as well, as those payments are intended to replace income and support the veteran’s family as well as the veteran.
(j) Compensation for lost wages.
This type of income would typically come from a lawsuit. For example, if an individual was in a car accident that was not their fault and suffered a broken leg, and that person worked a job that required a lot of walking and was unable to work while the leg was healing, that individual could try to recover lost wages caused by the injury in a lawsuit. Since the purpose of such an award would be to make up for lost wages, it is considered income for child support.
(k) Undistributed income of a business entity in which a party has an ownership interest sufficient to individually exercise control over or access the earnings of the business, unless the income is included as an asset for the purposes of imputing income pursuant to section 12 of this regulation. As used in this paragraph:
(1) “Reasonable allowance for economic depreciation” means the amount of depreciation on assets computed using the straight-line method and useful lives as determined under federal income tax laws and regulation.
(2) “Undistributed income” means federal taxable income of a business entity plus depreciation claimed on the federal income tax return of the business less a reasonable allowance for economic depreciation.
This paragraph applies to individuals who are self-employed and/or own their own business. Essentially, this rule seeks to prevent a business owner from simply not paying him or herself in order to avoid or lower their child support obligation. Undistributed income is still counted as income.
(l) Childcare subsidy payments if a party is a childcare provider.
States receive funds from the federal government, which they can use to help low-income families pay for childcare. If a parent is a childcare provider, these subsidy payments are counted as income.
(m) Alimony.
Alimony received by a parent, whether from the other parent or from a different former spouse, is counted as income for child support.
(n) Except as otherwise provided in subsection 2, all other income of a party, regardless of whether such income is taxable.
The regulation contains a “catch-all” provision for other types of income, except those specifically excluded. The regulation also specifies that it does not matter if the other type of income is federally taxable or not.
In addition to specifically enumerating the types of income to be used to calculate child support, the new regulation also specifically excludes certain forms of income. These excluded forms of income include:
(a) Child support received.
This exclusion applies when a parent has more than one other co-parent. If, for example, Co-Parent 1 pays child support to Parent for Child 1, those child support payments will not count as income for the child support calculation between Parent and Co-Parent 2 for Child 2, and vice versa. This is because child support payments are intended to benefit the child, not the parent receiving them.
(b) Foster care or kinship care payments.
When a parent decides to foster a child, they typically receive a subsidy from the state. This subsidy is intended to pay for the foster child’s needs, so it is not counted as income. Similarly, when an individual takes in a child to whom they are related but who is not their child (i.e., a niece, nephew, grandchild, etc.), they may be eligible to receive a subsidy from the state. Again, this payment is intended to help provide for the child, so it is not counted as income.
(c) Benefits received under the federal Supplemental Nutrition Assistance Program.
Commonly referred to as “SNAP,” these benefits typically come on a debit-like card to low-income families, and can be used to purchase eligible food in authorized grocery stores. These benefits are not counted as income for child support.
(d) Cash benefits paid by a county.
Sometimes counties also pay temporary benefits for those who are very low income, and these benefits often come with strict guidelines. They are not counted as income for child support.
(e) Supplemental security income benefits and state supplemental payments.
As discussed above, this includes SSI benefits, as well as supplemental payments paid by states to supplement a federal SSI payment.
(f) Except as provided in paragraph (l) of subsection 1, payments made for social services or any other public assistance benefits.
To individuals who need ongoing care due to age or disability or for those with very low income, sometimes states offer additional benefits with things like meals, transportation, personal care, counseling, etc. Additionally, there are programs such as assistance with paying energy bills, WIC (which is a nutrition program for women who are pregnant or have small children), and medical bill assistance programs. These benefits are not counted as income for child support.
(g) Compensation for losses, including, without limitation, both general and special damages, from personal injury awards not intended to replace income.
Damages from personal injury awards not intended to replace income (for example, payments for pain and suffering) are not counted as income.
While all of this may seem confusing, the general idea is that income received for work or in place of work, plus other forms of taxable income, including alimony, are all counted as income for child support purposes, while forms of public assistance or monies paid due to having a very low income, child support, and personal injury damages not intended to replace income are not. If you have questions about what counts as your income for child support, or what should be included in your co-parent’s income, an attorney experienced in family law can help.
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