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How do judges decide the alimony amount you must pay?

You recently learned that you must pay alimony as part of your divorce. While you have considerable assets, you still want to know how to budget your post-divorce finances accordingly.

What income does the court consider when deciding how much alimony a person must pay? Learn which aspects of your financial life judges scrutinize so you can get a well-informed estimate of how much you may owe your ex-spouse.

Federal income tax return

Expect the court to examine your most recent federal tax return. Judges have the right to look into your earning history to determine if you earned income that you did not report on your taxes. Additionally, courts consider if the money that comes in matches the money going out. For instance, a person may have a few expensive cars, a mansion in Texas and a luxury beach house. If that individual reports a yearly income of $80,000, a judge may dive deeper to determine where the money for such a lifestyle comes from.

Earned compensation and income

Your earned income and compensation also determine how much alimony you pay, including dividends received from your investments. Additional examples of income and compensation include carried interest, salary, partnership distributions, company perks, deferred compensation and signing and performance bonuses. Do you receive company contributions for your retirement account? If so, that becomes an additional factor in deciding your alimony payment.

Earning potential

Courts consider not only how much a spouse earns, but also what she or he could earn. If you graduated with a PhD in writing studies and used to teach at a prestigious university as a tenured professor but now work part time at a bookstore, a judge may calculate your alimony according to your professor’s salary rather than your current salary.

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