Easily Overlooked Income Sources on the New York Statement of Net Worth
Accurate financial information is critical to an equitable divorce settlement. New York family law attorneys know that clients are sometimes “creative” in their financial reporting, hoping to reduce New York State spousal support and child support. Attorneys also know that this fraud is not only unlikely to succeed but it could also open the client to criminal penalties. To protect the client, attorneys might want to ask specifically about these kinds of easily overlooked sources of income.
Bonuses/Tips – Bonuses and tips can fluctuate wildly, leaving clients unsure what to report. In particular a client doesn’t want to over-predict future income and get stuck with unreasonably high support obligations. Assure your clients that judges understand these kinds of incomes are variable and support calculations will likely take this into account. Use New York child support software to prepare multiple scenarios for different levels of variable income in order to find a fair support amount.
Perks – Many clients don’t realize that benefits such as company cars, club memberships and other job perks are considered income. These employment extras directly affect the client’s spending — e.g. a person with a company car won’t be spending money on gas and maintenance for a family car — so should be reported on the net worth statement.
Unreported Income – A person who gets a $100 cash payment for a job he does for a friend might not report it on a tax return and, let’s be honest, the IRS isn’t likely to catch the omission. However clients need to remember that the spouse is going to be reporting family income as well. If your client doesn’t report the income and the spouse does, it undermines the client’s credibility. The judge is going to wonder how many other omissions are on the form. Remind your clients that full disclosure is always better.
Gambling & Gifts – Many people don’t realize gambling winnings, even small ones, and gifts should be reported as income. They are easy to overlook and forget about when trying to remember what last year’s income was. Again remind clients that the spouse is going to be reporting income as well, and even accidental omissions will undermine the client’s credibility.
Nontaxable Income – Income that might not need to be listed on an income tax form still should be reported on a Statement of Net Worth. New York divorce law takes into account all sorts of income when determining fair child and spousal support.
Easy Soft’s law practice management software saves you time so you can give clients more personal service. Take time to go over financial information with a client and ask questions that might bring to light unreported income.