What Is In-kind Income For Purposes of Calculating Child Support?
In-kind income is defined as non-cash payments received in exchange for services rendered or in lieu of a cash contribution. New Jersey Courts specifically identify in-kind income as the “fair market value of goods, services or benefits received in lieu of wages and in the course of employment.” Our courts further distinguish that these goods, services or benefits must be derived from employment, self-employment or the operation of a business. Common examples of in-kind income include vehicle expenses, automobile insurance, housing, meals and vacations. It is important to note that expense reimbursements, such as repayment for expenses incurred during a business trip, are usually not considered income.
As discussed in our previous blogs, when establishing a child support award, it is imperative to review all sources of a party’s income. Our courts have specifically identified that in-kind income is not exempt from this analysis, as many perks of employment reduce personal living expenses. In practice, the issue of in-kind income for purposes of child support typically arises in two scenarios. The first scenario involves an employee of a company that receives various benefits from his/her employer. For example, if an employee is provided an automobile and that they are permitted to utilize for both business and personal usage, they are receiving an in-kind benefit associated with the personal use of the vehicle. The same is true for an employee’s utilization of a cell phone for both business and personal use that is provided by their employer. Lastly, if an employee is provided free (or greatly subsidized) housing as a part of their employment, the value associated with such living accommodations would be added back into the child support analysis as in-kind income.
The second scenario involving in-kind income arises when a party is self employed or a member of a closely held corporation. While many expenses associated with self-employment are typically not taxable as income by the IRS tax code, the value of such benefits will often be included as in-kind income for purposes of establishing child support. In addition to the “perks” identified above for employees such as automobiles and cellular phone expenses, business owners typically derive further benefits such as deductions associated with home offices or entertainment. For purposes of child support, New Jersey specifically excludes any reduction of income affiliated with a business expense of a home office or entertainment expenses associated with their business.
If you have questions regarding the inclusion of in-kind income within a child support analysis, the attorneys at Ulrichsen Rosen & Freed LLC can assist you. Our attorneys recognize that every child support case is unique and have significant experience advising clients how to best navigate issues surrounding such applications.
If you have questions regarding the calculation of income for purposes of child support, the attorneys at Ulrichsen Rosen & Freed LLC can assist you. Our attorneys recognize that every child support case is unique and have significant experience advising clients how to best navigate issues surrounding such applications. Our firm is focused exclusively on the practice of family law and serves clients throughout New Jersey including clients residing in Mercer County, Somerset County, Hunterdon County, Burlington County and Middlesex County.
