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How Do I Prove My Spouse’s Self-Employment Income?

by Steve Fritsch on May 6, 2013

W-2 FormProving your spouse’s income is important because it is a key factor in determining child support, spousal support and attorney fees.  If your spouse is a straight W-2 employee, meaning he or she is paid by someone who takes taxes out of their paycheck, it is generally easy.  The more difficult task is proving the income of a spouse that is self-employed.  This is because many self-employed people are loose with their deductions and claim a lot of expenses.  Therefore, the question becomes is how do you ensure that your spouse’s self-employment income is correct?  This article will provide some tips in proving your spouse’s self-employment income.

Make sure your spouse provides the information required in the Income and Expense Declaration

When a motion is filed for spousal support, child support or attorney fees, each spouse must file an Income and Expense Declaration.  Also, the Income and Expense Declaration is a required document for Preliminary and Final Disclosures.  No matter the reason for the Income and Expense Declaration, it must be filled out correctly.  For self-employed people, they must attach a Profit and Loss statement for the past 12 months and Schedule C’s for the last two tax filings.  If these documents are not attached to the Income and Expense Declaration or the Profit and Loss statement is not done correctly, be sure to raise this issue to the judge and make sure the judge orders that it be done correctly.

Do your discovery

Although discovery is time consuming and can be costly, it can be so important in proving your spouse’s income.  The great thing about divorce litigation is that most information is relevant and discoverable.  If what you are asking for is related to someone’s income, it is pretty much discoverable.  Therefore, you can ask for your spouses’ bank statements as well as information relevant to his or her business such as company bank statements and financial documents (e.g. ledgers, financial statements, QuickBooks, etc.).  If he or she refuses to provide them, you can request that the court compel him or her to produce such documents.   If you do not get enough bank statements, then send out subpoenas to the banks.

Keep an eye out for bank statements

If you believe a divorce is in the future, make sure if you have not already, that you are paying attention to financial documents.  For example, you may not know what bank your spouse uses for his or her company but the statements maybe around the house somewhere.  Therefore, if your spouse does not disclose a bank account you can subpoena it.

Hire a forensic accountant

Sometimes this is the only way to determine what your spouse makes or what the company is worth.  A forensic accountant has the skill to look at all the documents and determine what the actual income available for support is rather than the “claimed” income.  In some instances, the court may even appoint a forensic account to determine the income or value of the company.  Although forensic accountants are great, the problem is that they can be expensive and their evaluations can take while.  However, that may be a small price to pay if the information obtained leads to an increase in the child or spousal support.

Take an interest in your spouse’s business

Although by the time you file for divorce it is too late, this should be done as soon as your spouse starts his or her own business.  Ask questions while you are married.  Ask to see a financial statement.  Ask to explain his or her Schedule C and how he or she came to those numbers.  So many times, a client will come to my office and say that their spouse owns his or her own business and they do not have a clue about what he or she makes or any of the basic financials of it.  When a spouse comes and at least has a basic understanding of the business it makes things easier in seeking information during the divorce litigation.

In sum, proving a spouse’s self-employment income can be difficult, costly and time consuming.  However, the effort and money may be the best decision should such information lead to an increase in child support and spousal support.

DISCLAIMER:  This article is for informational and educational use only and is not intended to be legal advice in any way.  If legal advice is needed, one should seek a consultation from an attorney.

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