Issues Determining Your Spouse's/Former Spouse's Income

Many issues in a Rhode Island Divorce revolve around each party's income; this is true even if parties are not married, but the issue of Child Support is being considered.  Dividing the assets and debts is important and needs the consideration of each party's income.  The need to determine each person's income is important whether you have a lawyer representing you or you are pursuing Divorce Mediation to resolve your divorce.

Some people try to hide their income; some people are unable to hide income from employment.  Business owners and those in cash businesses are able to manipulate receipt of income.  This is often done prior to a divorce.

Methods of Determining Income

  • There are some methods to determine income. One straightforward method is to look at paystubs, W-2's and income tax returns. This works well for salaried employees who do not have large investment income nor own side businesses.
  • A second method requires more time and analysis. This involves collecting and analyzing bank records, brokerage or investment statements, records of ownership of certain assets that produce tax-free income (for example, municipal bonds), and business records. All inflows (deposits) are considered.
  • If a lot of the records mentioned above do not exist or provide a clear analysis. These methods above rely upon someone having specific income reported by an employer which is then deposited into a specific account.
  • Another method of determining income is considered to be a measure of expenditures. This method requires detailed collection of funds expended. Funds are withdrawn from various bank or investment accounts, retirement accounts and credit card statements. This goes hand in hand with lifestyle considerations. Is there a new vehicle or vacation that cannot be explained by documented expenditures? This method is more detailed and takes more time to collect the information and analyze it.
  • Another method is the net worth method, where a trained person reviews the net worth of an individual over time. Have there been increases or decreases in net worth that cannot be explained? Has net worth grown over a period of time that cannot be explained by the changes in the market? If so, there is more income than expenses. Or the same can show a decrease in net worth which can show expenses greater than income. This method is used by the federal government in criminal income tax cases.

Forensic accounts can be used in each of these methods to help determine the income of a party.  We can work with your accountant or suggest one to perform the analysis. For more information or to schedule a consultation, contact our office online or call us at 401-287-2079.