The National Bureau of Economic Research states that six years after divorce, family income falls by more than 40%. A study by the National Institutes of Health also found that women who divorce typically experience a 45% reduction in their standard of living. Although divorce can affect income, the opposite is also true. The income of each spouse is a key factor in calculating alimony, and it also plays a central role in calculating child support. Parents and spouses may be able to approach these calculations with greater confidence if they understand how family courts define “income” in this situation. A family law attorney in Arizona could provide further insights. Consider calling (480) 719-2558 to continue this discussion with an experienced and dedicated family law attorney from Sullivan Shick.
Income Has a Broad Definition in Arizona Family Courts
Parents and spouses should know that Arizona family courts define “income” in very broad terms. Virtually all forms of income become relevant when calculating alimony and calculating child support. This includes obvious forms of income, such as paychecks or the profits of a family business. However, the family court is also aware of less common forms of income. If a parent or spouse earns income from a less-than-common source, family courts are unlikely to ignore it. According to their logic, any income a parent earns should become a factor in support calculations.
Child Support Guidelines in Arizona specifically mention a wide range of income types. These include salaries, wages, commissions, and bonuses. If a parent earns their income through corporate dividends or distributions, these payments will play a role in calculating child support. Severance pay is included in this definition of “income,” as is military pay. Even if a parent is retired, their pension will likely become a factor in calculating child support. If a parent earns interest on an investment, that too plays a role in child support calculations. Another major factor is trust income, which is common among high-net-worth individuals. Also mentioned are annuities and capital gains. Even gifts and prizes are “income” in the context of child support.
Are Assistance Programs “Income” for Child Support Purposes?
Some assistance programs play a role in child support calculations. Child Support Guidelines in Arizona specifically define a number of government assistance programs as “income” for the purposes of calculating child support. These include unemployment insurance benefits, workers’ compensation, disability (including military disability), and social security.
What Is NOT Considered “Income” for Child Support Purposes?
While most forms of income are included in child support calculations, there are a few exceptions. Perhaps the most confusing example is child support itself. If a parent already receives child support for one child, they do not have to include these payments in child support calculations for a different child. As a general rule, any income a parent receives “for the benefit of a minor child” is exempt from future child support calculations. This includes not only child support, but also things like adoption subsidies, Supplemental Security Income (SSI), and any subsidies arising from the disability of a child.
In addition, certain “means-tested public assistance programs” are always exempt from child support calculations. These include Temporary Assistance to Needy Families (TANF), Supplemental Security Income, and Nutrition Assistance and General Assistance. Family courts in Arizona may consider additional means-tested programs on a case-by-case basis.
How Does Arizona Define “Income” When Calculating Alimony?
As with child support, Arizona defines income in the same way during alimony calculations. However, alimony is slightly different because spouses can theoretically create their own arrangements outside of court. During divorce mediation in Arizona, spouses are free to create their own alimony agreement. They might also dismiss the possibility of alimony altogether. In addition, spouses can agree to forgo alimony in a prenuptial agreement before the marriage occurs. To discuss these strategies in greater detail, consider a consultation at Sullivan Shick.
In contrast, parents cannot exercise this level of flexibility when it comes to child support. In the eyes of the family court, children depend on these payments – and there is no option to forgo child support with a private agreement.
The Role of “Attributed Income” in Child Support and Alimony
The concept of “attributed income” could play a role in both child support and alimony calculations. Family courts understand that parents and spouses may stop working in order to escape paying child support and alimony. Because of this, courts often “assign” a certain level of income to a payor rather than considering their actual earnings. In other words, courts might consider the “earning capacity” of a payor rather than their recent paychecks.
During this process, courts may consider various factors. These might include the qualifications, degrees, or certifications of a particular payor. A judge could consider the earning history of a payor or their unique job skills. They might also examine the local job market and nearby employers willing to hire the payor. In addition, they may consider whether the payor can take a higher-paying job than their current position. For example, a parent might have a history of earning six figures as a CEO. If this parent decides to take a part-time, low-paying job as a dog walker, they could be forced back into their previous position to facilitate higher levels of child support.
Contact the Experienced Family Law Attorneys at Sullivan Shick To Ensure Your Legal and Financial Rights Are Protected
Divorce can lead to significant economic pressures, and it makes sense to alleviate some of these burdens if at all possible. Regardless of whether a spouse stands to pay or receive support payments, alimony and child support could represent pathways toward greater post-divorce financial stability. After learning more about the definition of income during divorce, a payor could execute strategies to lower their support obligations. On the other hand, a greater understanding of income calculations could potentially help a payee receive more. The most appropriate strategy depends entirely on the unique circumstances of each parent or spouse – and parties may wish to discuss their specific situations with family law attorneys in Arizona for further insights. Sullivan Shick has experience calculating alimony and child support, so consider calling (480) 719-2558 to continue this discussion.