What Counts as Income in a North Carolina Child Support Case?

Many assume that money is only considered “income” if it comes directly via a paycheck. Other sources – be it a loan from a family member, money from selling a piece of property – surely don’t count when a court settles child support. Right?

In North Carolina, the definition of income for child support is much broader than most expect. And as one appeal shows, the moment to explain where your money came from (and to determine what is “income”) is early and on the record, not after the order is finalized.

A 2024 North Carolina Court of Appeals decision, Hands v. Hands, offers a cautionary tale of how courts treat money and income – and what can happen to parents who don’t fully disclose finances.

Note: As this is an unpublished opinion, it is not a binding precedent. However, it does show how appellate courts may approach these kinds of cases.

Hands v. Hands: A Background of the Case

David and Tyyawdi Hands married in September 2008 and had two children together prior to separating in October 2019. The two were able to resolve most of their divorce via agreement, including property division and custody.

However, there was one issue they couldn’t resolve: child support. That disagreement soon found its way to trial.

The events that occurred in the lead-up to that trial had a significant impact on nearly everything that followed. David Hands repeatedly fell short of his obligations in the case:

• He provided incomplete responses during discovery
• He failed to appear for his scheduled deposition
• He filed a financial affidavit that the court described as “incredibly incomplete”
• He completed only the first two pages of the required form and never completed a rental expense worksheet – despite having reported rental income

The repeated discovery violations and rule violations led the trial court to grant the mother’s motion in limine. As a result, Mr. Hands was sanctioned against presenting evidence that could have helped make his case.

Why Did The Court Not Hear the Father’s Evidence?

A “motion in limine” is a request to keep certain evidence out of a hearing. In the case of Hands v. Hands, the trial court used this motion as a consequence of the father’s repeated conduct during the case.

North Carolina’s Rule 37 gives trial judges broad authority in sanctioning a party who fails to comply with discovery. That includes the power to prohibit that party from introducing certain pieces of evidence. When a parent fails to provide suitable documentation of income – as Mr. Hands failed to do – a court may impose sanctions on its own or at the other party’s request.

As a result, Mr. Hands forfeited his chance to offer evidence of his expenses before the judge.

The trial court then entered a permanent child support order in October 2022 with more than 150 findings of fact. That order required the father to pay $2,785.09 per month, beginning in January 2022, along with arrears and attorney fees.

But there’s another important detail: Mr. Hands never appealed the October 2022 order.

When fighting the numbers later, he was not asking the appellate court to find error in the original calculations. Instead, he was asking whether the trial court had to revisit decisions that were already final – a much harder argument to win.

What Counts as Income in Child Support Cases?

On appeal, Mr. Hands argued that the trial court wrongly treated several deposits as income during the case. In particular, he pointed to:

• The proceeds from the sale of property totaling $362,892.40
• A claimed $100,000 “loan” from his fiancée and another $50,000 from his brother
• A number of other deposits he described as cash advances and reimbursements

These claims matter when going up against the North Carolina Child Support Guidelines. They include a parent’s actual gross income as coming “from any source” and contemplate money that arrives on an “irregular, non-recurring, or one-time basis”.

The Court of Appeals made a point in this case: any money gained from the sale of property is generally treated as income for child support purposes. But an equitable distribution award (such as the property a spouse receives in the divorce) is not income.

The purposes of equitable distribution and child support are “so dissimilar”, meaning equitable distribution protects the property interests of divorcing spouses, while child support protects the welfare of children.

Thus, Mr. Hands could not complain that his property-sale proceeds counted as income, while the mother’s distribution award didn’t.

When it came to the loans and miscellaneous deposits, Mr. Hands ran into an evidence problem of his own making: on bank statements in the record, the amounts simply appeared as “deposits”. He offered no testimony or documentation showing that they were specifically loans or reimbursements. Without that proof, the trial court was entitled to treat the deposits as income.

The lesson? A deposit is not automatically a loan or gift just because a party claims it is. If a party wants a court to treat money as something other than income, it must be documented, and documented on time.

Why Weren’t the Father’s Expenses Considered?

Mr. Hands also argued that the court should have factored in his expenses in the decision. However, the earlier sanction (fueled by his failure to complete documentation and appear at deposition) meant he was barred from presenting expense evidence.

After the order was entered, Mr. Hands did not pay in full. When the mother moved to hold him in contempt, his defense was that he was unable to pay the support as ordered. However, the trial court noted that he owned and operated his own law firm and owned a home valued at over $1,000,000 (along with rentable commercial property). He had also continued to spend money on dinners, flowers, and an engagement ring for his fiancée.

The court also found a history of manipulating and concealing income. Mr. Hands tried once more to introduce new financial evidence at the contempt stage, but the court denied his attempt. The mother’s attorney argued that reestablishing the father’s income after the order would be an attempt to relitigate the previous decision.

The court agreed and held Mr. Hands in civil contempt – as well as affirming an award requiring him to pay $44,652.24 in unpaid support, arrears, and attorney fees.

What Does Hands v. Hands Mean for North Carolina Parents?

Hands v. Hands is unusual in its details, but there are some key lessons that parents can take away from the process and result of the case:

• Income is broader than your salary: Be prepared to prove – with documentation – any money you believe should be counted as a loan or reimbursement.
• Discovery is not optional: Missed deadlines or skipped depositions can lead to sanctions that limit your right to present evidence.
• Appeals should be filed at the right time and in the right way: Later motions or contempt hearings typically can’t be used to relitigate previous decisions.
• You must support a claim of “I can’t afford child support”: The court will scrutinize assets and spending closely. Documentation is necessary to build credibility and provide proof in an inability-to-pay defense.

The outcome of every child support case will depend on the facts at hand. However, Hands v. Hands shows that transparency, timeliness, and good documentation can go a long way toward building your case.

Are You Facing a Child Support Dispute in North Carolina?

Whether you’re seeking or paying child support, knowing the law – and your options – matters. How you present your finances can shape the result for years to come.

At Woodruff Family Law Group, our team can help you understand your rights and aid you in putting a strong, well-documented case forward. Contact our Greensboro family law team to schedule a consultation today.