Income Available for Payment of Alimony

Income available for alimony, also known as spousal support, shares similarities with the income calculation for child support but isn't always the same. Unlike child support, the court has broader discretion in determining what qualifies as "income" for alimony purposes.

Common Forms of Income Considered for Alimony

For W-2 employees, income calculation is straightforward, as their paychecks usually tell the full story. However, for corporate executives, additional forms of compensation, such as bonuses and perquisites, may be included in their income for alimony purposes.

Calculating income is more complex for self-employed individuals. The type of business entity plays a significant role in this calculation. For example, income from a Subchapter S corporation, limited liability company (LLC), or partnership may differ significantly from income earned through a Subchapter C corporation.

This page will discuss the various types of income available for spousal support purposes. Ready? Let's get started.

What Is Income Available for Alimony?

Income available for alimony includes wages, salaries, commissions, bonuses, rents, dividends, pensions, retirement income, trust income, interest, annuity payments, disability insurance benefits, unemployment benefits, Social Security benefits, and, under certain circumstances, Worker's Compensation benefits.

For a self-employed person, income available for alimony (sometimes called "cash flow") is typically the gross revenue from the business minus reasonable business expenses. If a business expense partially or fully covers a personal expense, it may be added back as income to the self-employed spouse.

Depreciation is another disputed issue in calculating income for a self-employed spouse. While complex, depreciation is generally not an out-of-pocket expense and may be disregarded in some circumstances when determining income available for alimony.

How Is Income for Alimony Determined?

For wage earners, determining income available for alimony is usually straightforward. A W-2 form provides a clear picture of a person's annual income, while pay stubs offer a monthly breakdown and year-to-date figures.

The process is more involved for the self-employed. An attorney or forensic accountant may need to review the company's financial records, including general ledgers, profit and loss statements, and balance sheets. These documents are the foundation for determining income available for alimony from a self-employed individual.

Spousal Support and Imputed Income

Alimony isn't always based solely on actual income. The court has the authority to impute income if it determines that a person is either unemployed or underemployed but has the ability, capacity, and opportunity to work. In divorce cases, whether before or after the judgment, a spouse seeking to impute income to the other spouse will often retain a vocational examiner, according to Family Code 4331.

Ready to learn more? Click on the links below for related reading on alimony in California.