What is Considered Income for Spousal Support?

December 7, 2019August 12, 2020
by Angie

If you’re like many people going through a divorce in California, you need to know what is considered income for spousal support. That’s true whether you’re likely to have to pay spousal support (commonly called alimony) or whether you’re likely to receive it.

Usually, the court awards alimony to the lower-earning spouse. It’s a way to level the playing field so that the lower earner has time to get on his or her feet and become completely self-sufficient.

When a judge awards spousal support, he or she must consider the paying spouse’s income.

But what is considered income for spousal support? Here’s what you need to know.

What is Considered Income for Spousal Support?

Judges will only award spousal support when one spouse makes a significant amount more than the other does. The alimony must be fair and reasonable to the lower-earning spouse, but it has to be something that the higher-earning spouse can actually afford. That’s why the courts consider income as a major factor.

Income for spousal support includes all sources of money that a person receives, whether it’s through a paycheck, through stock dividends or through another source. Generally, everything that you’d pay income tax on when it’s time to make a payment to the IRS counts as your income.

What About Imputed Income?

If the person who is supposed to pay spousal support is working a job that pays less than what he or she could earn – especially if the person is doing it purposefully to avoid paying spousal support or child support – the courts can figure out an amount based on a higher figure. That’s known as imputing income for support, and it means that the court will attribute income to a person who hasn’t actually earned it.

Here’s an example: Your ex takes a $20 per hour job as a mall security guard, even though he or she is an established draftsman or engineer who was previously employed in a large firm (and made more than $20 per hour). The court may use the salary from your ex’s previous job to determine how much support he or she should pay. That’s imputed income that your ex could reasonably earn, as shown by his or her prior employment history.

Here’s another example: Your ex has been earning $90,000 per year in a long-term job. However, that job requires a lot of travel. Your ex quits and takes another job making just half of his or her previous salary – and then says that spousal support is unaffordable. The judge in your case will want to know why your ex quit the stable, long-term job, and you’ll have a chance to explain that it was completely voluntary. In a case like that, the judge could impute income, resulting in a spousal support payment comparable to what you’d receive if your ex still had the $900-per-year job.

A Word on Spousal Support AS Income

When someone receives spousal support, he or she must count it as income when filing federal and state tax returns. According to the IRS, alimony needs to be included in a person’s income if the two parties involved meet the following conditions:

The spouses don’t file a joint return with each other
The payment is in cash (including checks or money orders)
The payment is to or for a spouse or a former spouse made under a divorce or separation instrument
The divorce or separation instrument doesn’t designate the payment as not alimony
The spouses aren’t members of the same household when the payment is made (this requirement applies only if the spouses are legally separated under a decree of divorce or of separate maintenance)
There’s no liability to make the payment (in cash or property) after the death of the recipient spouse
The payment isn’t treated as child support or a property settlement

As a side note, if you pay spousal support, the IRS says “Alimony is deductible by the payer spouse.”

Do You Need Legal Advice on What is Considered Income for Spousal Support?

If you need legal advice, such as what is considered income for spousal support, or if you want to find out whether you’ll have to pay – or be entitled to – spousal support, we can help. Call us at (209) 989-4425 or get in touch with us online to schedule your consultation. We’ll help you with every aspect of your divorce, from child custody and child support to property division.

Divorce

5 High-Asset Divorce Mistakes You Can’t Afford to Make

May 12, 2019May 10, 2019
by Angie

High-asset divorces can be incredibly contentious – and unfortunately, when there’s a lot of back-and-forth, people make mistakes. But making a mistake in a high-asset divorce can cost you for the rest of your life, so it’s important that you’re aware of the potential pitfalls and that you know how to steer clear to protect your assets.

Check out these five high-asset divorce mistakes so you know how to protect yourself – and your future.

5 High-Asset Divorce Mistakes: What NOT to Do

The most common high-asset divorce mistakes we see in our offices include things like:

Letting emotions rule over logic
Making rush decisions just to get the divorce over with
Hiding assets from one spouse
Failing to consider tax consequences
Going straight to litigation rather than negotiation

Here’s what you need to know about each of these high-asset divorce mistakes.

High-Asset Divorce Mistake #1: Letting Emotions Rule Over Logic

Divorce is an emotional process, whether it’s due to infidelity or anything else – and that can make it tough to make logical decisions. However, now is the most important time to focus on what’s most important: your future.

It’s not uncommon for one party in a divorce to feel guilty about what’s happening, but it’s a big mistake to let that guilt guide the decision-making process. For example, if you feel bad and agree to give your spouse double the spousal support he or she would ordinarily receive, or you decide to hand over more than half your marital assets, you’re cutting into your own future.

On the other side of the coin, you can’t use the court system to exact revenge on your spouse. Divorce is a legal process, and if you try to use the legal system to get back at your ex for what he or she has done, it’s more than likely going to backfire on you.

High-Asset Divorce Mistake #2: Making Rush Decisions

In many cases, both parties just want the divorce to end – and they’re willing to make less-than-informed decisions in an effort to wrap things up quickly. There are several reasons people want to rush through divorce, such as hoping the divorce will attract less media attention or simply wanting to be done with a spouse they can’t stand any longer.

Unfortunately, though, you can’t rush through a divorce and cover all your bases. You need to take the time to avoid making serious mistakes that will cost you long after your divorce is final.

High-Asset Divorce Mistake #3: Hiding Assets

In some cases, one spouse hides assets from the court so he or she doesn’t have to split them. California is a community property state, which means the assets you accumulate during your marriage – in most cases, anyway – belong to both spouses.

Hiding assets can get you into serious hot water with the courts – and in addition to the court finding out about those assets and dividing them anyway, you’ll lose your credibility. The majority of hidden assets are eventually discovered during the divorce process.

High-Asset Divorce Mistake #4: Failing to Consider Tax Consequences

Divorce changes your financial situation – sometimes drastically. Most of the financial transactions that take place during divorce have tax consequences, including the division of retirement accounts and the sale of homes, vehicles and other property.

Your attorney may suggest that you hire a tax professional or another financial expert to help you understand the tax consequences of the financial decisions you make now.

High-Asset Divorce Mistake #5: Going Straight to Litigation

For most people – even in high-asset divorces – negotiation is the way to go. You may not mind spending money on attorney’s fees through litigation, particularly if it means you’re going to “win,” but the vast majority of people who negotiate their own settlements end up being far more satisfied with the outcome than those who litigated in court.

When you and your spouse reach agreements on the major issues surrounding your divorce, including child custody and property division, your divorce will go faster and be less stressful for everyone involved. If you and your spouse can’t reach agreements on your own, your attorney might suggest that you work with a mediator who can help.

Related: What is divorce mediation?

Need to Avoid These Costly High-Asset Divorce Mistakes?

We welcome the opportunity to answer your questions about mediation and divorce-related issues such as custody, child support, spousal support, and the divorce process.

Call us at 209-546-6870 for a divorce case evaluation. You’ll talk to an experienced Stockton divorce lawyer who can give you the advice you need to begin moving forward.

Tag: <span>Tax Consequences</span>

What is Considered Income for Spousal Support?

What is Considered Income for Spousal Support?

What About Imputed Income?

A Word on Spousal Support AS Income

Do You Need Legal Advice on What is Considered Income for Spousal Support?

5 High-Asset Divorce Mistakes You Can’t Afford to Make

5 High-Asset Divorce Mistakes: What NOT to Do

High-Asset Divorce Mistake #1: Letting Emotions Rule Over Logic

High-Asset Divorce Mistake #2: Making Rush Decisions

High-Asset Divorce Mistake #3: Hiding Assets

High-Asset Divorce Mistake #4: Failing to Consider Tax Consequences

High-Asset Divorce Mistake #5: Going Straight to Litigation

Need to Avoid These Costly High-Asset Divorce Mistakes?

Related Links

Our Office