When calculating child support, the Court will often look at all sources of income to set the proper financial obligation. One area that the Court will review is sporadic income that may be part of your total compensation.
Our Court Rules provide that sporadic income is “income from any source that is sporadic or fluctuates from year to year”. While not the most detailed definition, the Rules provide examples that sporadic income sources could include seasonal work, dividends, bonuses, royalties and commissions. For purposes of child support, the amount of gross income shall be determined by averaging the amount of income over the previous 36 months or from the date of the first occurrence of its receipt, whichever time is less.
As the Court may exclude sporadic income if the party can prove it will not be available in an equivalent amount in the future, it is crucial that you provide the Court and your attorney with as much information as possible regarding your sporadic income sources. A prime example would be income that is derived from bonuses. If your bonuses structure has downwardly modified over the past year, it will remain your burden to prove that your lowered bonus was due to an involuntary change in circumstance. Such changes could include a different position within your company, a termination of the bonus plan or a new job that may modify the components of your compensation. If you bonus is tied to the performance of your industry, mere market forces alone may not warrant the Court to stray away from the “standard” 36 month average. Again, the devil is in the details of how you develop your position that past payments of bonus or other type of sporadic income should not be simply averaged when setting a prospective award.
It must be noted that overtime compensation is treated differently than compensation based off of bonuses, commissions, dividends and royalties. Per the New Jersey Court Rules, for overtime pay or income from a second job, the average is based on the prior 12 months or first receipt, whichever time is greater. Providing accurate payroll records will ensure that the proper amount is calculated into the support obligation.
The inclusion of sporadic income into a prospective support obligation may have serious consequences in your divorce litigation. If this matter surfaces in your case, I strongly recommend that you contact experienced matrimonial counsel to further review.