The Sworn Financial Statement: Calculating your “gross monthly income” – part 2

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This is a long list, and it is obvious after reading it that in addition to your regular job, you may have other sources of “income”. You do not want the Court to find that you are hiding income, so it is best to disclose it all. If there is a chance that the funds can be excluded from income, your attorney can let you know this and can make the appropriate arguments when necessary.

Here’s a quick (and possibly over-simplified) description of how to calculate your gross monthly income:

If you are an hourly employee, here is the formula for determining your “gross monthly income”:

Multiply the hourly amount (for example $14/hr.) by the number of hours worked (40 hrs./week is a full-time schedule) by 52 weeks in a year and then divide that amount by 12.

For example:

$14/hr. X 40hrs. =$560/week,  and  

$560/week X 52 weeks/year =$29,120/year,   and

$29,120/year divided by 12 months=$2426.66

Sworn Financial Statement Help

This means your “gross monthly income” is $2426.66/mos.

For most child support and spousal support calculations, “full-time employment”, generally means 40 hours per week. Sometimes less than 40 hours can be full-time when proven that the lesser hour employee is still considered “full-time” by the employer). Hours in excess of 40/week can often be excluded for hourly employees when any overtime is optional. Mandatory overtime pay, however, gets included as income.

These calculations can get more complex when shift differential is added and sometimes we will need to look at many months of pay statements to determine an actual hourly rate.

If you are salaried, to get your gross monthly income, this may simply be a matter of taking the full amount you earn for one year (BEFORE any taxes or deductions are taken) and dividing it by 12 months. However, hours worked in excess of 40 hours per week are usually not excluded from income since the salary encompasses the number of hours—whatever that number may be. Do not forget to include any bonuses or incentive pay you may receive in addition to your salary as they will also be divided by 12 to get a monthly amount that must be added to income.

If you work on commission or have a varied income each month, you may be able to determine an average amount of gross income per month if your pay statements show a yearly amount and it is near the end of the year. For many instances, though, you will have to try to figure out some other way to determine your income. If you believe that your current yearly income is comparable to prior years, you might be able to use those prior tax returns to show what you likely made so far this year.  Courts often look at the prior 3 years of tax returns to determine a ballpark amount for incomes. When combined with testimony that you believe the current year is comparable to, or much more or less successful than the prior years, or why the current year is or is not comparable to prior years, the Court can determine your likely gross monthly income.

If you are self-employed, it gets a little more involved because you can deduct your costs and expenses (but NOT taxes) from gross revenues to arrive at your gross income. Often a K-1 or Schedule C from a tax return will provide historical income information as well as anticipated deductions for expenses. Depreciation is usually allowed by the Court as an expense but depreciating an asset (such as a company vehicle) could have other unintended consequences when dividing marital assets.

If you are unemployed, work “under-the-table” or work with your spouse in a home-based business for no pay, you will need to determine what a Court is likely to do with “imputing” you to an income. Imputing an income means the Court will look at the type of work you do or could do, the type of work and wages you have in your history, your monthly expenses and whether your work appears to pay enough to cover those expenses, bank statements for deposits, education level, ability to work full-time or disability status. For many unemployed people, the Court will impute a minimum wage at  least and will often offset the minimum wage with unemployment benefits actually received. For “under-the-table” work, bank statements and your monthly expenses and whether you need credit cards and loans to meet those expenses will be reviewed. For a home-based business with a spouse, the expertise required, the income generated by the business and the ability of the spouse who is leaving the business to find other employment may play a key role.

Getting it right the first time can help you preserve credibility before the Court and the Judge as well as giving you an early opportunity to start understanding the likely outcome of your case. At The Law Office of Jeanne M. Wilson & Associates, PC, we understand the law and the Courts’ application of the law, so we understand how important it is for our Clients to get it right. Let us help you if you are facing a divorce or custody or family case. Your financial future deserves the best.