Thursday, March 22, 2012

Divorcing? You Need to Find all Hidden Sources of Income

By: Carole L. Chiamp

Some family law practitioners have learned to look for unusual assets for division in divorce, such as frequent flier miles, country club memberships, season tickets to sporting events, accrued vacation and sick time benefits.

Family law practitioners should also be sure that all income is found for purposes of spousal and child support. As clients, you should be sure to advise your attorney about any possible income, other than the obvious wages.

Discovery should include income which is not listed on the 1040 tax statement. That might include the following types of income:

● Employer’s contribution to a tax-deferred savings plan;

● Interest and dividend income which is re-invested but not received;

● Social security benefits;

● Veteran’s benefits and fringe benefits;

● Lottery winnings, gambling winnings, prizes;

● Retained earnings of a closed corporation and depreciation on equipment which should be added back to income;

● Employment fringe benefits, such as use of a car, entertainment expenses, housing and health care;

● Inappropriate business expenses which should be added to income;

● Certain voluntary contributions to pension or 401k over the amount allowed by Michigan child support guidelines;

● Imputed income, such as an amount a spouse’s income is diminished but for his/her refusal to work or work full-time.

Only when all sources of income are on the table can you be sure that support is properly calculated.

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