Do Your Winnings Affect Your Child Support Obligations in Indiana?

by Matthew Derrringer

You got a lucky hand at blackjack and are now heading up to cash in your chips. Or, you picked the right scratch-off at the gas station and are now calling up the Hoosier Lottery headquarters to figure out when and where to pick up your jackpot. It never hurts to win, but in Indiana, winning at gambling or the lottery will most likely impact your child support obligation.

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Your Winnings Are a “Prize”

The laws of Indiana consider income from almost every source when determining a child support award. Winnings from the lottery or gambling would be categorized under the term “prize;” therefore, they might come within the purview of consideration when calculating a monthly child support payment -- if the winnings occurred in time to affect the initial child support ruling. If the winnings occur after a child support order has already been set, the amount could be modified.

Time to Re-Calculate

Both custodial and noncustodial parents have a right to request a modification of a child support order if circumstances have changed. A custodial parent will usually request an increase, while a non-custodial parent typically requests a decrease, often because of an inability to make payments due to unemployment, underemployment or other change in income. However, winnings from either the lottery or gambling may lead to a modification in the child support order if the winnings are large enough to warrant a long-term change in monthly payments. Anything less may not trigger a change at all. Further, it is important to remember that a court is unlikely to modify an existing child support order if it finds the existing order is sufficient to support the child’s needs.

Arrearage Interception

Indiana passed legislation in 2010, which has since been implemented, that intercepts both lottery and gambling winnings from parents who are in arrears on child support. However, the law states that the winnings must meet the minimum amount to require a federal tax reporting form, currently set at $1,200.00. However, state taxes will be paid from the winnings first. In passing this type of interception law, Indiana is in the minority. Other states, such as neighboring Illinois, have seen similar attempts at passing this type of legislation stalled by the casino lobby.

You’re Not Being Punished

The focus of child support in most states, including Indiana, is the child – not the parents. The bedrock principle of determining what is in the “best interests of the child” is used for both child support and child custody decisions. If a court determines that winnings from the lottery or gambling should be considered in either an initial child support order or a subsequent modification, the winnings will play a role in determining the amount of child support owed.