Whether a case is about child support or spousal support, determining what qualifies as income can be a complicated issue. California courts have a great deal of discretion in determining what qualifies as income. This discretion can have a significant impact on the long-term financial aspects of a spousal support order.
When determining income for support, the court should consider the potential earning capacity of each parent. This can be calculated using the parent’s occupation qualifications and his or her current residence. If the parent is a business owner, the court can also consider depreciation. This deduction is intended to promote the continuity of the business for a longer period of time.
The amount of potential income for a parent should not be less than the minimum hourly wage for a 35-hour work week. The parent’s occupation qualifications should be considered, as well as the parent’s work history.
When a parent is self-employed, the gross income is calculated by subtracting the necessary expenses from the gross receipts. The amount of gross income should be computed on an annual basis. In addition, the court may prorate the irregular income over a period of time.
If a parent is a business owner, the depreciation of business assets is an important deduction. This deduction can be added back to taxable income when calculating support. This can be helpful for real estate investors and business owners.
Similarly, the court may consider the pattern of overtime work when determining a parent’s ability to provide child support. This may be helpful in determining whether the parent is underemployed or overemployed.
