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Lucy, Esq.
Lucy, Esq., Lawyer
Category: Family Law
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Experience:  Attorney with experience in family law.
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When determining alimony, gross income numbers are used to

Customer Question

When determining alimony, gross income numbers are used to do the calculation.
Does this include business income as well as wages?
Submitted: 11 months ago.
Category: Family Law
Expert:  Lucy, Esq. replied 11 months ago.

Hi,

I'm Lucy, and I'd be happy to answer your questions today.

The calculation is going to include all income reported on a tax return, which includes business income that is reported on a Schedule C. Whether other business income would be considered is going to depend on things like whether business income was frequently withdrawn to cover living expenses during the marriage, whether the spouse uses business accounts to pay personal expenses, whether the spouse intentionally takes a low salary in an effort to try to reduce alimony, whether the spouse who owns the business is a sole owner or one of many, and things like that. The judge is allowed to look at total business income and expenses vs. the reported wages taken from the business vs. the marital standard of living to see whether something isn't adding up.

Note also that the spouse who does not own the business may be entitled to a portion of the other spouse's interest, especially if the business was started during the marriage or if the non-owner spouse worked to increase the value of the business during the marriage.

If you have any questions or concerns about my response, please reply WITHOUT RATING. It's important that you are 100% satisfied with my courtesy and professionalism. Otherwise, please rate my service positively so I am paid for the time I spend answering questions. If you are on a mobile device, you may need to scroll to the right. There is no charge for follow-up questions. Thank you.

Customer: replied 11 months ago.
He is an insurance/investment salesman. His claimed expenses are high.
Wages and salaries 18k.
Business income 44k.
Expenses 38k, ridiculous, right?
The business income was regularly drawn on for living expenses.
Will the alimony be based on the income before or after expenses? Is this at the judges' discretion?
Expert:  Lucy, Esq. replied 11 months ago.

With a business, the judge is usually looking at income after expenses, because that's what goes on the Schedule C. But when it's really obvious that someone is racking up expenses to make their income appear smaller, or refusing to pay himself a salary from a profitable business just to avoid paying alimony, the judge can impute additional income to that spouse. People do this a lot, but judges are pretty smart. You can produce evidence that shows the actual funds available to him. That may include subpoenaing bank and credit card statements from the business.

Every living expense paid for by the business is going to be considered part of his wages, which will add to total income. That should help, especially if the business pays for things like a car, insurance, and cell phone.

Customer: replied 11 months ago.
Lucy, are you there?
Expert:  Lucy, Esq. replied 11 months ago.

Yes, I'm here.

Did you have more questions about this?

Customer: replied 11 months ago.
I sent a follow up question.
Expert:  Lucy, Esq. replied 11 months ago.

I'm sorry, but it looks like it didn't post. Can you try again?

Expert:  Lucy, Esq. replied 11 months ago.

I apologize that we're having some technical issues today. I have to log off for the evening, but I'm happy to answer your follow-up questions tomorrow morning.

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