When a couple divorces, there are a number of important financial issues that must be resolved during the settlement process. Both parties must understand that financial support is determined by income, which can fluctuate based on a number of factors. There are a variety of funds that are considered to be part of a person’s gross total income. Gross income is an individual’s income and receipts from nearly all sources. It is the starting point for determining the taxes that an individual will pay. The alimony amount should reflect those changes.
Sources of gross income include:
- Salary: This would include all tips, bonuses, profit sharing, severance pay; as well as overtime income, wages from other jobs, and investment and interest income
- Pension income
- Trust or estate income
- Capital gains
- Veterans’ benefits and other military pay
- Workers’ Compensation pay, unemployment benefits, and disability insurance benefits
- Lottery and/or gambling winnings
- New spouse’s income if it reduces the parent’s expenses
- Alimony from a previous ex-spouse
- Self-employment income including rent, royalties, and other business-related income
When determining alimony payments, the courts will also consider “unrealized income,” which is income that exists on paper but has not yet been dispersed. The following are examples of unrealized income sources.
- Individual Retirement Accounts (IRAs): The issue surrounding IRAs in determining child support is whether the interest earned should be considered income if it is reinvested back into the IRA, as opposed to being withdrawn.
- Unrealized gain from Unexercised Stock Options: While there are few instances when unexercised stock has been considered income, it is likely that this will become the trend.
- Retained Earnings of a Corporation, Partnership, or Sole Proprietorship: Some states believe that this should be considered income when determining spousal support, while others do not. Other states say that it should depend on whether the person responsible for paying spousal support is a majority owner entitled to retained earnings.
- Income From a Trust: If potential income from a trust were not yet available to the spouse responsible for paying alimony, it would not be considered income.
- Capital Gains from Stock Transactions: There are questions as to whether capital gains should be considered legitimate income when determining alimony payments. An experienced divorce lawyer will be able to explain whether capital gains will be factored in as income.
Towson Divorce Lawyers at Huesman, Jones & Miles, LLC Help Clients With Alimony Payments
If you are going through a divorce in Maryland, you will need to determine eligibility or responsibility for alimony payments. Towson divorce lawyers at Huesman, Jones & Miles, LLC will work closely with you for the best possible outcome. Our experienced team is well-versed in all financial income sources that can have an impact on spousal support. To schedule a confidential consultation, call us today at 443-589-0150 or contact us online. We serve clients throughout Baltimore County, Carroll County, Harford County, and Howard County, including Baltimore, Towson, Essex, Columbia, Pikesville, and Bel Air.