The Income Conundrum: What is and is not Income for Child Support Purposes?

Over the last several months, the Illinois Appellate Court has had numerous opportunities to opine on what constitutes income for purposes of calculating child support under the Illinois guidelines. Under certain circumstances, retirement benefits, social security benefits, stock options sales proceeds, and loan proceeds have all been declared to be includable in the calculation for child support. In the case of In re the Marriage of Marsh, 2013 IL App (2d) 130423, the Court again revisited the issue, this time in the context of money a father received from the sale of stock. The Court ultimately concluded that the monies received from the sale of the stock were not income for purposes of calculating child support because the proceeds were received in exchange for an asset owned prior to the divorce.

Under these particular set of facts, pursuant to the judgment for dissolution of marriage, the father was ordered to pay the mother child support of $731 per month as well as 20% of all additional income. After the father received $275,000 of sales proceeds from the sale of stock and he failed to pay the mother 20% of the proceeds, the mother sought to hold him in contempt of court.

Making the issue confusing is the fact that the relevant Illinois child support statutes do not define “income.” Therefore, the Courts have had to make case-by-case determinations based on the individual facts as to what exactly constitutes income. In In re Marsh, the Court evaluated whether the sales proceeds from the stock were new monies received as a return on investment or capital, thereby increasing the father’s wealth. The Court ultimately decided that the conversion of the stock to cash did not result in a “gain” to father because the cash proceeds simply took the place of the stock. Therefore, the father did not have to pay 20% of the sales proceeds in child support.