The Florida statute goes into great specifics about what shall be considered income for the purposes of child support or alimony.
“Income” means any form of payment to an individual, regardless of source, including, but not limited to: wages, salary, commissions and bonuses, compensation as an independent contractor, worker’s compensation, disability benefits, annuity and retirement benefits, pensions, dividends, interest, royalties, trusts, and any other payments, made by any person, private entity, federal or state government , or any unit of local government, or any uint of local government. United States Department of Veterans Affairs disability benefits and unemployment compensation, as defined in chapter 443, are excluded from this definition of income except for purposes of establishing an amount of support. Fla. Stat. Sec 61.046(5)
As you can see, it’s not simply the money you get from your check. Bonuses, business income, and options may all be available through your job and those benefits that eventually can be turned into cash will be considered income.
Investment income is considered income for the purposes of child support and alimony. It can be as simple as dividends from stocks or rents from real estate. Investment income can also be shielded from looking like current income in myriads of ways. For example, Warren Buffet’s famous stock, Berkshire Hathaway, has regularly grown but has never issued a dividend.
The division of marital assets can often create income to both parties. For example, if a pension is divided in two, both parties’ pension payments will be considered as income to each party, respectively.
Perhaps the better question to ask is: “what is not income?”
One time distributions may be considered as a capital asset and not as income. Vollmer v. Vollmer, 33 So. 3d 67 (Fla. 1st DCA 2010)
Drawing down your assets (not just taking an interest payment or dividend) is also not be considered income. Receiving cash by taking on debt is also not be considered income for child support or alimony purposes.
What isn’t income is often what gets litigated in a divorce case. Spouses will declare their annual bonus as a one-time distribution because “it’s not guaranteed.”
Cash income or secret second jobs can usually be proven via bank records and/or spending habits.
During a divorce, people often deliberately stop working, don’t work as much or suddenly find work in a lower paying field for the purpose of reducing their income. Courts can then impute income to that party based on these facts.
Finally, business owners are notorious for masking personal income as business expenses. Those expenses which are mostly for personal purposes should be recalculated as additional income to the party.
Business owners also can appear to have a lower income due to the nature of “pass through” entities like Chapter S corporations. Courts are very familiar with the concept of “pass through” income and do not allow that amount to be the exclusive calculation of income in a divorce. Zold v. Zold, 911 So. 2d 1222 (Fla. 2005) Courts will look to cash withdrawals and other cash flow to determine income.
The biggest issue with determining income is that the proof of the income is usually under the control of the person earning the income. This requires the other party’s lawyer to issue discovery requests to the person regarding their income and subpoenas to third parties (customers and clients) to verify the income. In my experience, if there’s any evidence of manipulation of income for the purposes of reducing income for the divorce, the judge starts making estimates about what the person really earns. Those estimates are almost always on the high side.
Defending an accusation of misdirecting income is simple: disclose everything exhaustively. After sifting through thousands of pages of bank documents, the other side will realize there is no hidden “Easter Egg”
If you have more questions about income and support for your Collier County divorce, contact my Naples, Florida law office to schedule a free consultation.