Does Workers’ Comp Count as “Income” When Determining Child Support in Maryland and D.C.?

Worker Compensation Illustration

Yes. In both Maryland and the District of Columbia, workers’ compensation benefits are included in the definition of “income” for purposes of determining child support obligations. See D.C. Code, § 16–916.01 and Md. Fam. Code, §12–201(b). Generally, both statutes define actual income to basically include income “from any source.” For this reason, workers’ compensation benefits are included as “income.” Other examples of income include:

  • Salaries, wages, and earnings
  • Commissions
  • Earnings related to self-employment
  • Bonuses
  • Dividend income
  • Pension income
  • Interest income
  • Income from a trust or an annuity 
  • Income from investments like rental income and royalty-generating income
  • Social Security benefits, including old age, disability, and other types of benefits
  • Unemployment insurance benefits
  • Disability insurance benefits
  • Alimony or spousal maintenance received
  • Expense reimbursements if they reduce a parent’s personal living expenses
  • In-kind payments or “perks” (like room and board or use of a company car) that reduce a parent’s personal living expenses
  • And more

Under some circumstances, Maryland and D.C. courts may take other forms of income into account including severance pay, gifts, winnings from games of chance, prize money, capital gains, etc.

In some high-income divorce and child support cases, disputes can get quite heated over whether to consider certain items to be income. A few examples include:

  • Interest on financial instruments like retirement accounts
  • Gains from unexercised stock options, even when the gains are unrealized in actual income
  • Retained earnings from an owned corporate entity
  • “Tax fiction” capital gains from stock transactions — in some States like New York, these gains are not income (because they are, in effect, fictional — reported to the IRS, but not real income); in other States, such are included as “income” for child support purposes

Why does income matter for child support payments?

In both Maryland and the District of Columbia, child support payments are “income derived.” That is, lawmakers in both jurisdictions decided that “parental income” should be the basis for determining how much child support a divorce court should order. This is explicitly set forth in the child support guidelines set forth in each statute. Essentially, more wealthy parents should spend more money raising their children. Child support guidelines include income from any funds available to the parent. You figure out the net income after you get the parent’s gross income. Remember that a child dependency exemption impacts the net income.

“Adjusted Income” is the actual basis for determining child support

It is worth emphasizing that, however defined, gross income is NOT the basis for determining child support obligations. Rather, in both Maryland and the District of Columbia, the basis is “adjusted income.” In other words, various things are subtracted from gross income to obtain an “adjusted income” figure, and child support is calculated based on that number. A few common items typically subtracted include:

  • State and federal income taxes
  • Social Security and Medicare taxes
  • Various payroll deductions for retirement, union dues, etc.
  • Health insurance premiums
  • And more

Maryland And D.C. Family Law Attorneys

Contact the seasoned and experienced Maryland and D.C. family law lawyers at The Law Offices of Thomas Stahl for more information. We have the skills and expertise you need. We have proven experience with family law for Maryland and the District of Columbia. Schedule a consultation today or call us at (410) 696-4326 or (202) 964-7280. We have offices in Columbia, MD, and Washington, DC.

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