Child support calc: restricted stock units, employee rewards


#1

I have a question about the NC Child Guidelines regarding computation of non-custodial parent’s (NCP) gross income. Along with my regular salary and wages, and discretionary bonuses, I receive “restricted stock units” (RSUs), and infrequent “employee awards” in the form of credits that can be converted at a corporate rewards site for gift cards (but not for cash).

My prior understanding was that NC only considers “cash in the bank” compensation for gross income computation. That is, money that you receive in currency or deposit, which can be utilized immediately without restriction. The guidelines[1] (b Gross Income[/b]) indicate to me that income can include income from trusts, annuities, dividends, interest, capital gains, (and here’s where I get confused) “gifts, prizes,…” But are non-cash prizes (gift cards, goods, services, discounts) considered “income?” … Since gift cards have no cash value, and cannot be redeemed for cash, I would think they would not be considered, any more than, say, travel expenses granted by an employer contingent on company travel, or a company expense account, or clothing and business supplies provided directly to the employee. It’s a small amount, but as an irregular, non-recurring item, discretionary employee rewards wouldn’t’ seem like an equitable form of salary and wages for monthly income computation.

The RSUs seems a stickier issue. They vest on a regular basis (limited by the grant period, in my case four equal, annual vesting events over the grant period of four years), but in the form of capital; RSUs are liquidated at vesting time to pay for Federal taxes, and the remainder are deposited in my account as stock. Since I don’t liquidate them, and therefore don’t receive further capital gains, shouldn’t these be excluded from gross income calculations unless and until I actually liquidate them? It seems unfair that the law (or Court) would mandate that I liquidate vested stock grants simply to pay monthly expenses and child support obligations.

Thanks in advance for any and all insight you can provide. I apologize if this has been answered recently, I searched back through the previous year or so of threads and didn’t see any instance of these specific types of income mentioned.

[1] https://nddhacts01.dhhs.state.nc.us/GuideLines.jsp#Income


#2

Gift certificates should be income. It is not the same as reimbursement for travel expenses or supplies. If they are infrequent, you can come up with an alternative to how these bonuses will be treated rather than including them in your income to determine the monthly obligation.

As for the stock, that is a more delicate issue. I know where you are coming from, but you shouldn’t be able to wait until the day the child turns 18 to cash in your stock simply to avoid paying child support on that portion of income. Again, there is probably some sort of compromise that can be made so you don’t have to cash in your stock, but it is accounted for somehow.


#3

Thanks for your thoughtful reply. I see your point, that this “income” could be considered revenue or capital gains available immediately, or deferred to “avoid child support.”[1] In the case of Stock Units, the employee doesn’t have any decision-making in the quantity or value, other than accepting or refusing the initial grant, and whether or not to liquidate the stock.

[1] Or … retained as capital for investment, and the cash value at time of vesting paid out of pocket (liquid assets) for child support.

In my own case, i have scheduled vesting events, the cash value of which is variable based on company stock price; a portion of the vesting amount is liquidated by my employer and paid to the Federal and State tax revenue agencies for taxation. It might be reasonable to liquidate an additional portion of the vested amounts to pay the equivalent percentage of the child support obligation.