Income Disclosure in Divorce: Support Calculations & Discovery

May 2, 2024

In divorce proceedings, both parties are obligated to transparently disclose their assets, debts, and income. Although the law mandates truthful reporting of earnings to the court, some individuals choose to deceive by underreporting their income sources, aiming to evade financial responsibilities such as settlements or support payments. The Guardian ad Litem’s final recommendation and report, issued before the final hearing, can play a pivotal role in resolving disputes and ensuring fair outcomes.

Determining Support Payments

When determining child support and spousal support, the Court looks to the “gross income” of each party. Pursuant to Ohio Revised Code 31109.01, this includes all earned and unearned income from all sources during a calendar year. The law also includes salaries, wages, overtime pay, bonuses, commissions, royalties, rents, dividends, severance pay, pensions, trust income, annuities, social security benefits, and benefits that are not means tested. The Court does not consider benefits received from means-tested government programs including, but not limited to, veterans’ benefits, supplementary security income and disability financial assistance.

Challenges in Identifying Income Sources

A party will know the opposing party has these sources of income, but they might not have details about where the income is deposited or how it’s distributed. The biggest obstacle is when a party receives income by cash. For example, if a party has rental properties, they might receive monthly rent payments in cash, which may not be consistently documented. Consequently, attorneys involved in the divorce proceedings devote considerable effort to tracing and documenting these income sources.

Discovery Process and Documentation

During a divorce, attorneys may issue subpoenas to financial institutions, employers and individuals who have any documentation on a party’s income. It is also important to get documentation from payment apps such as Venmo, CashApp and Zelle. These are common financial accounts that hold money but also show deposits from outside sources.

In addition to subpoenas, attorneys will issue a request directly to the opposing party requiring them to provide proof of their income source. Even if the party is not honest in responding, it can be used to discredit the party later when supporting documents show they have received income.

Tax Returns and Support Calculations

As part of the process, attorneys typically request to exchange copies of the parties’ tax returns. This serves as a useful starting point for understanding each party’s income sources. However, the income reported on tax returns may not align with what the Court uses for support calculations. For example, the IRS permits depreciation and other deductions to reduce the income on rental properties or other assets. The Court, on the other hand, considers all income sources but may not factor in all deductions.

Importance of Comprehensive Information

Having comprehensive information is crucial during a divorce. To build a strong case, it’s essential for a party to collaborate with their attorney in the discovery process, even if it involves costs like paying for subpoenas and discovery. In the end, this investment is worthwhile for achieving a successful outcome.

For questions regarding your divorce, please contact KJK Family Law Partner Carly Boyd (CBoyd@kjk.com; 213.736.7254).