Information You Need for Proving or Opposing Child Support Income
The methods for reducing declared income pending divorce are as numerous as the reasons marriages disintegrate.
A few examples of questionable methods are: loans to or from friends, padded payroll, sweetheart asset sales, barter, deductions of personal expenses, reduced work hours, delayed acceptance of contracts, unrecorded deposits, temporary write-offs, uncounted or inventory, and excessive retention of corporate earnings.
These and many more pre-divorce parental tactics are covered in Nicholas Bourdeau’s practical book, The Determination of Income for Child Support. The author, a veteran of over 1,000 engagements, has condensed his decades of experience into an easy-to-understand guide to investigating, questioning, computing, and proving the amount of income a parent has available to pay child support.
His book is loaded with hard-won tips and real-life illustrations showing where adjustments to Form 1040 income are either likely to be needed or should be opposed. For example:
- “On three occasions I have had ex-wives who were angry turn their offending ex-spouses over to the IRS. The result was uniform. The IRS….” Page 15.9
- “The business owners who are investigated and their spouses have one thing in common – they are reluctant to disclose questionable business practices for fear those practices will become known to the IRS. This situation is both a lever and a lock….” Page 15.9
- “The best way to avoid any possible problems being made public is to….” Page 15.10
- “Is a refund of state taxes income for the determination of child support? Parents have claimed it as income, excluded it, and fought about it. The amount is an adjustment of tax liability, not income. It does not speak to the productivity of parents or their ability to derive income from gainful employment.” Page 1.3
- “W-2s should be requested at the same time as the tax returns. Failure to provide the W-2s is a red flag.” Page 2.9
- “My general position on deductions from income is that they must be mandatory before they are allowed. That is, the employee must not have a choice on whether or not a deduction is made from his or her income.” Page 3.1
- “The current rate of pay normally is better evidence of a parent’s ability to pay child support than the tax return.” Page 3.2
- “The normal means of estimating future overtime hours is by averaging past overtime hours. However, other evidence can certainly be presented. For example….” Page 3.2
- “A business operation will normally generate (or report) less revenue in its last year of operation before a divorce when compared to other years of operation. Investigators should be aware of this nearly universal phenomenon and take steps to compensate for it. These steps include….” Page 5.2
- “I know something is wrong when the business owner has changed accounting methods [from cash to accrual or vice-versa] during the course of a divorce.” Page 5.4
- “Business owners can avoid entering business receipts a variety of ways….” Page 5.4