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How to Define Income

In a Dissolution of Marriage, the couple’s finances are usually the main issue in the case. Finances are considered in determining the division of assets and liabilities (equitable distribution), child support and alimony. In most instances determining a spouse’s income is not very difficult. Tax returns, w-2’s and pay stubs can assist in determining a person’s yearly income. However, not everyone is a salaried employee who gets paid on either a yearly salary or standard 40-hour workweek. There are many people who work on commission or have a large part of their income paid in either quarterly or yearly bonuses. So are these bonuses income? How do we determine income when a bonus is not guaranteed or a commissioned salesperson cannot predict how his year will be?

In determining child support each parent’s income must be considered to calculate the monthly support. It cannot be recalculated each month depending on an individual’s income which may vary based on sales totals or bonuses.

Income is actually defined by Florida Statutes as follows:

  1. Salary or wages.
  2. Bonuses, commissions, allowances, overtime, tips, and other similar payments.
  3. Business income from sources such as self-employment, partnership, close corporations, and independent contracts. “Business income” means gross receipts minus ordinary and necessary expenses required to produce income.
  4. Disability benefits.
  5. All workers’ compensation benefits and settlements.
  6. Reemployment assistance or unemployment compensation.
  7. Pension, retirement, or annuity payments.
  8. Social security benefits.
  9. Spousal support received from a previous marriage or court-ordered in the marriage before the court.
  10. Interest and dividends.
  11. Rental income, which is gross receipts minus ordinary and necessary expenses required to produce the income.
  12. Income from royalties, trusts, or estates.
  13. Reimbursed expenses or in-kind payments to the extent that they reduce living expenses.
  14. Gains derived from dealings in property, unless the gain is nonrecurring.

The above clearly shows that income is not just what a person may bring home each week in a check. Car allowances, for instance, would be considered reimbursed expenses or in-kind payments, which must be considered as income.

We’re often asked whether overtime (again never guaranteed) is income. The answer is “yes” and it will be considered when determining child support. Of course, if overtime is no longer available because of economic conditions than it should be considered as well. A voluntary reduction in income, such as refusing overtime when it is available, is not permitted and such a reduction will not be considered. In addition, a person cannot voluntarily reduce his/her income by changing jobs and expect to be able to either reduce or increase child support or alimony obligation. If someone is “underemployed” additional income may be imputed by the courts. Of course, sometimes a reduction in income can occur due to circumstances beyond the individual’s control.

If you have any questions, we suggest you contact an experienced family law attorney for the answers.

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