Lets examine, what money can be excluded as income under the New Jersey Child Support Guidelines, the reasoning behind these exclusions, and how they impact child support calculations.

What is Considered Income Under the NJ Child Support Guidelines?

Before discussing exclusions, it's essential to understand what qualifies as income under the guidelines. According to Appendix IX-B of the New Jersey Court Rules, income generally includes:

• Wages and Salaries

• Bonuses and Commissions

• Self-Employment Earnings

• Dividends and Interest

• Rental Income

• Government Benefits (with exceptions)

• Pension and Retirement Income

• Workers' Compensation and Disability Payments

However, certain funds may be excluded from income calculations. Below, we examine these exclusions and their implications for child support.

Types of Income Excluded from Child Support Calculations

1. Means-Based Government Benefits

Some government benefits are designed to support individuals based on financial need. These benefits do not count as income for child support calculations. Examples include:

• Supplemental Security Income (SSI): This federal program provides benefits to disabled individuals with low income and resources. Because SSI is a means-tested benefit, it is not considered income for child support purposes.

• Temporary Assistance for Needy Families (TANF): TANF provides cash assistance to low-income families and is excluded from income calculations since it is a needs-based program.

• Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps): Because SNAP benefits are meant to assist with food costs, they are excluded from child support calculations.

• General Assistance (GA): This state-level benefit for individuals who do not qualify for other assistance programs is also excluded.

2. Child Support Received for Other Children

If a parent receives child support for a child from a different relationship, that money is not included as income when calculating support obligations for another child. This ensures that child support payments received for one child are not treated as an income source for determining obligations toward another child.

3. Foster Care Payments

Foster parents receive government payments to cover the costs of caring for foster children. These payments are excluded from income calculations because they are intended to support the foster child's needs, not as income for the foster parent.

4. Certain Veteran's Benefits

Some veteran's benefits, such as needs-based Veterans Pension benefits, are not included in income calculations. However, non-means-tested VA benefits, such as disability compensation, may be included unless specifically exempted by the court.

5. Certain Lump Sum Payments

While many lump sum payments (such as lottery winnings or settlements) are included as income, some exceptions exist:

• Personal Injury Settlements: If a portion of the settlement repay previously unpaid medical expenses, then the portion for previously unpaid medical expenses may be excluded.  The settlement agreement must clearly delineate what portion of the the award is for reimbursement of unpaid medical expenses.  Without a clear designation, a court is likely apply the entire award as income that can be used to pay child support

• Workers' Compensation Settlements: Structured settlements may be excluded if they compensate for future medical expenses rather than lost income.

• Inheritance: If a parent inherits money, it may be excluded unless it generates regular income (such as interest or dividends).  Then the investment income would be part of the the parent's income for child support purposes.  

6. Employer Reimbursements and Expense Allowances

Employers may provide reimbursements for work-related expenses, such as travel, meals, and lodging. These reimbursements are not counted as income because they are meant to cover business costs rather than provide additional income. However, excessive or disguised payments that effectively increase a parent's earnings may be scrutinized.

7. Non-Liquid Assets

Owning property or assets does not necessarily count as income unless the asset generates revenue (such as rental income from real estate). Non-income-producing assets, such as a personal residence, are not considered income for child support purposes.

8. Educational Grants, Scholarships, and Student Loans

Funds received for educational purposes, including grants and scholarships, are excluded from income calculations. These funds are typically designated for tuition, books, and living expenses while attending school. Student loans are also excluded since they must be repaid.

9. Monetary Gifts

One-time financial gifts from friends or family are not considered income for child support calculations. However, if a parent regularly receives significant monetary gifts that effectively serve as income, a court may consider them in determining child support obligations.

10. Tax Refunds and Tax Credits

Tax refunds and certain tax credits, such as the Earned Income Tax Credit (EITC), are generally not included as income because they are not considered a regular source of earnings.

Why Are Certain Sources of Money Excluded?

The rationale behind these exclusions is to ensure fairness in child support calculations. The guidelines recognize that:

• Means-based benefits are provided due to financial hardship and should not reduce a parent's child support obligation.

• Certain payments, like reimbursements and foster care stipends, serve a specific purpose and should not be treated as discretionary income.

• Support received for other children should not be double-counted as income.

How Exclusions Impact Child Support Calculations

When determining child support, the court examines a parent's income to establish an appropriate support obligation. Excluding certain funds from income calculations can significantly impact the outcome.

For example:

• A parent who primarily relies on SSI benefits may have little to no countable income, reducing their child support obligation.

• A parent receiving a large tax refund or inheritance may not see an increase in child support obligations unless those funds generate income.

• A parent who receives reimbursements for work-related expenses does not have those funds counted against them in support calculations.

Final Thoughts

Understanding what money can be excluded as income under the New Jersey Child Support Guidelines is essential for both custodial and non-custodial parents. While many sources of income are included in child support calculations, means-based benefits, child support received for other children, educational grants, reimbursements, and certain lump sum payments are among the exclusions recognized by the courts.

If you are involved in a child support case and believe that some of your income should be excluded, consulting with a family law attorney or referring to New Jersey Court Rules, Appendix IX-B can help ensure that child support is calculated fairly and accurately. Each case is unique, and courts may consider additional factors when making their determinations.