When Support Calculations Start with Different Numbers
Support discussions can stall before anyone calculates a payment. A tax return may show one income figure, while current earnings, corporate records, or employment changes suggest another. The disagreement may concern fluctuating compensation, business expenses, or whether someone could reasonably earn more. Identifying the source of the difference helps determine which records and legal rules are relevant. A disputed figure does not necessarily mean income has been concealed.
The Tax Return Is a Starting Point
For child support, total income reported on a tax return is generally the starting point, with adjustments required under the applicable Child Support Guidelines. The amount used for support may therefore differ from taxable income or take-home pay. Spousal support calculations generally begin with the same income framework, although some adjustments differ. Establishing income also does not, by itself, establish entitlement to spousal support. Complete and current disclosure is the foundation for determining income. Where disclosure is required, providing a tax return alone may not satisfy the obligation. Depending on the income sources involved, pay statements, compensation agreements, corporate financial statements, and details of payments to related people or companies may also be required. These obligations do not depend on the other person first proving that income has been understated. A useful distinction is whether the disagreement concerns missing information or how disclosed income should be treated. For example, an unexplained corporate payment raises a disclosure question; whether a fully documented payment should count toward support raises an income-determination question. The steps needed to resolve each are different.
Bonuses, Commissions, and Fluctuating Earnings
A single year may not fairly represent income where earnings vary substantially. Bonuses, commissions, seasonal work, and non-recurring payments can require a closer review of the pattern over time. For child support, the court may consider the preceding three years where the usual calculation would not produce the fairest result. This does not mean that a three-year average automatically applies. For example, a salesperson’s unusually large commission may reflect a transaction unlikely to recur. Alternatively, steadily increasing commissions may show that an older average understates current earnings. Compensation records, employment terms, and the reasons for the change help distinguish those situations.
Business Income Requires a Closer Look
For a business owner, salary and dividends may not fully reflect the money available for support. Corporate income, payments to related people, and expenses with a personal component may require examination. Income retained in a corporation is not automatically excluded or automatically available. The assessment should consider legitimate business requirements, such as working capital, alongside the owner’s circumstances and access to funds. Similarly, an expense permitted for tax purposes is not necessarily a reasonable deduction for child support. Relevant records may include:
- Personal tax returns and notices of assessment.
- Corporate financial statements and tax returns.
- Details of salaries, dividends, and shareholder transactions.
- Records supporting disputed expenses and payments to family members.
- Evidence explaining why funds must remain in the business.
An accountant or qualified financial expert may help reconcile these records and explain proposed adjustments. A business valuation alone does not determine annual income for support.
When the Court May Attribute a Different Income
A court can “impute” income, meaning it assigns an income amount for support purposes rather than accepting the reported figure. Under the Child Support Guidelines, this may arise from intentional underemployment, diverted income, unreasonable expense deductions, or failure to provide required information. A reduction in earnings does not automatically justify imputing a higher amount. Health, reasonable educational needs, and children’s care needs can be relevant. Evidence about qualifications, work history, available employment, and efforts to find work may also matter. The issue is whether the proposed income figure is supported by the circumstances. An allegation that someone could earn more needs more than dissatisfaction with their employment choices.
Turning the Disagreement into a Support Arrangement
Set out each disputed item, the adjustment proposed, and the supporting records. Where required information remains missing, a focused written request—and, if necessary, a disclosure order—may be needed. Expert analysis can help interpret financial records, but it does not replace the obligation to provide them. Failure to disclose can also lead to income being attributed by the court and an award of legal costs. Once income is established, the agreement or order should clearly identify the figure used and address future disclosure and any review or recalculation process. Where earnings fluctuate, specifying when information will be exchanged and how adjustments will be handled can reduce the risk of the same dispute returning each year.
