What Constitutes Income for Purposes of Calculating Child Support in Rhode Island?

          The Rhode Island Supreme Court has indicated that ” [t]he guiding principle in setting a child-support award is to balance the needs of the child against the financial ability of the absent parent.” Paradiso v. Paradiso, 122 R.I. 1, 3, 404 A.2d 60, 61 (1979). ” A court may consider all relevant factors, including the financial resources and needs of the child and each of the parents * * * [and] the Family Court may ‘ consider every factor that would serve to reveal in totality the circumstances and conditions’ bearing on the welfare of the children.” Sullivan, 460 A.2d at 1250 (quoting Bellows v. Bellows, 119 R.I. 689, 693, 382 A.2d 816, 819 (1978)). This Court defines a parent’s ability to pay very broadly, to ” provide the child or children with the greatest possible support.” Lembo v. Lembo, 624 A.2d 1089, 1090 (R.I.1993); see Adam v. Adam, 624 A.2d 1093, 1097 (R.I.1993); Sullivan, 460 A.2d at 1250; Brierly, 431 A.2d at 415.

           Income “[I]ncludes, but is not limited to, income from salaries, wages, commissions, bonuses, dividends, severance pay, pensions, interest, trust income, annuities, capital gains, social security benefits, worker’s compensation benefits, unemployment insurance benefits, disability insurance benefits, gifts, prizes, and alimony or maintenance received, and all other forms of earned [or] unearned income. Specifically excluded are benefits received from means-tested public assistance programs * * *.” Family Court Administrative Order 87-2, IV.B.1.

           What does this mean?  The Family Court must consider all the income that is available to the parties, not just taxable income.  If a party has rental income, for instance, but the rental income runs at a loss for tax purposes the Family Court must consider whether or not there is net income available to the party from the rental property regardless of whether or not “paper” losses, such as depreciation, result in a net paper loss.  The definition of income is not in any way related to whether it is reportable to the IRS so non-taxable gifts and benefits must also be considered.

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