Gross And Net Income For PA Support

Many of our Western Pennsylvania support clients want things laid out for them in black and white when it comes to their support matters. This is especially because support cases can be complex and involve a lot of number crunching and calculating. As such, today we are focusing on some support basics – arguably the most important of which is the difference between gross and net income and how to calculate each under Pennsylvania law.

Gross income for support includes the following sources of income:

(1) wages, salaries, bonuses, fees, and commissions;

(2) net income from business or dealings in property;

(3) interest, rents, royalties, and dividends;

(4) pensions and all forms of retirement;

(5) income from an interest in an estate or trust;

(6) Social Security disability benefits, Social Security retirement benefits, temporary and permanent disability benefits, workers’ compensation and unemployment compensation;

(7) alimony if, in the discretion of the trier of fact, inclusion of part or all of it is appropriate; and

(8) other entitlements to money or lump sum awards, without regard to source, including lottery winnings, income tax refunds, insurance compensation or settlements; awards and verdicts; and any form of payment due to and collectible by an individual regardless of source.

Another important aspect of determining gross income is that income tax refunds should not be included as income to the extent they were already factored into the party’s actual tax obligation for purposes of arriving at his or her net income.

Net income, on the other hand, includes the following deductions from gross income:

(A) federal, state, and local income taxes;

(B) unemployment compensation taxes and Local Services Taxes (LST);

(C) F.I.C.A. payments (Social Security, Medicare and Self-Employment taxes) and non-voluntary retirement payments;

(D) mandatory union dues; and

(E) alimony paid to the other party.

Net income is what will be used by the Pennsylvania Court to make the determination of the amount of support in a given case. It is important to note, however, that in Pennsylvania, if it is determined that a person has willfully failed to maintain or obtain employment, that person may be assessed with an “earning capacity” for support purposes. This means that they will be assessed with an income equal to that earning capacity – taking into account their age, education, job experience, and training, among other things.