Income as a Factor in Determining Support
Income is the most important factor in support. You want to find and prove the maximum income that you can establish for your spouse. We’ll search for your spouse’s income to demonstrate ways to check and places to look. On the other hand, while you can be expected to take a defensive stance when your income is under review, don’t try to hide income.
Sometimes, there’s just not much you can do with the facts. Your spouse may be a salaried employee who is paid the same amount every week. There are no fringe benefits. Your spouse doesn’t do any other work for pay, and never had a second job. Bonuses are not a possibility. The total earned income is well documented, and known to the penny. There’s no point in looking any further for income earned by your spouse. There isn’t any more, and the court will not expect your spouse to change his or her job, at least on these facts.
Now look for income from other sources. Study the documents you obtained by discovery in Chapter Eight when setting temporary support. Are there dividends, or other income, from investments? Are bonds being held which don’t yield income? Is there rental income, perhaps from renting a room in the family home? Will payments be received on a loan that was made? Will property sold in the divorce provide funds for your spouse to investment? Is an inheritance in probate, to be received soon? Does your spouse have income-generating separate property, such as a share of a family property? Are royalties coming in from past efforts? Are trust or annuity payments being received, or are they payable? Look through tax returns, the inventory of the safe deposit box and the contents of the box for more ideas.
Your spouse may be paid in a different manner than in our first assumption. For example, if an annual bonus is paid, average it over the last two years and add it to income. If there is a bonus but the amount is uncertain, try to negotiate a percentage split of whatever bonus your spouse receives before you ask the court for an order. You both may lose if you discourage your spouse from working harder for a bonus. If you must ask the court, ask for an order that a certain percentage of each bonus be paid as support and that a copy of the bonus check and statement to be sent to you. This may save attorney’s fees and prevent a dispute about whether the right amount was paid. Requiring ex-spouses to remain entangled in each other’s lives is unhealthy, but in these circumstances this is only occasional and still better than involving the attorneys in every event.
Overtime pay earned on a regular basis is straightforward. Average it out, just as we did with the bonus. Overtime is additional compensation, although the exact amount may be unknown for any particular week. If your spouse’s overtime is sporadic, find out the plans for next year. If there’s an overtime budget set, you’ll probably get a specific order; if not, you may get a periodic review—that is, an order that your spouse inform you and the court of overtime pay received as of a certain date.
Your spouse’s fringe benefits may be valuable to you also. Some are clearly compensation, such as club memberships and car allowances. But as always check your facts first before rushing in; the car allowance may prove inadequate to compensate for driving fifty thousand business miles a year.
Many benefits, such as a company car, cut your spouse’s expenses. An expense and entertainment account reduces expenses for the salesman who eats many meals at the company’s expense. Review check stubs, benefit statements and employment contracts to complete the list.
The entire compensation package will be variable if your spouse is a salesperson paid solely on commission. One way to deal with the uncertainty is to average the income for the past two years. Also, look for trends over the last six months when compared to the prior year. What are the company’s projections for the coming year? If your discovery has paid off, show why your spouse’s earnings will be up in the coming year.
Is your spouse living with someone in a new relationship? Seldom can you simply add in any additional salary. The court does not usually consider income earned by a new companion (or even a new spouse) unless you can show that it has cut down on your former spouse’s expenses.
You are now ready to calculate your spouse’s net monthly income. The court will allow only mandatory deductions, just as with temporary support. Federal and state income taxes are usually the largest items—but are the monthly withholding amounts correct? Too much is being withheld if there was a sizeable refund of taxes paid last year, which would mean less support for you. The amount of withholding necessary to pay actual taxes is the proper deduction. Start by using the right withholding status. Look at the withholding tables available from the Internal Revenue Service to judge whether the withholding claimed by your spouse is appropriate.
Deductions attributed to FICA are also mandatory. Self employment taxes are deductible, but check to see if this is as a condition of employment and thus only half deductible. Finally, state disability is allowed as another mandatory deduction.
Child or spousal support, if from another relationship and paid pursuant to court order, is another mandatory deduction from gross income to calculate net income. Job-related expenses also qualify, but the court must decide how much, if anything will be allowed.
Union dues, mandatory retirement contributions and medical insurance for the parent and the children complete the standard, additional deductions allowed from gross to calculate net income. Other expenses that may be allowed as adjustments when computing net income include: large unreimbursed medical expenses, uninsured losses and expenses for additional children in the home. If your spouse claims additional deductions, try to show that they are really expenses and thus do not reduce income. Net income is first and most important single figure; far down on the court’s list of considerations are ordinary expenses.
On the other hand, if you are paying support, look for upward adjustments in the support recipient’s income. If your spouse is a low wage earner and receives support, a substantial, but perhaps unknown, earned income credit may be available.