Self-Employment Complicates Spousal Maintenance Calculation
As of 2010, calculating temporary maintenance New York divorces is a simple matter of plugging each spouse’s income into two formulas and taking the lower result. The formulas are designed to take bias out of the New York spousal maintenance formula but they also prevent judges from overruling the formulas to fix unfair situations, such as when self-employment income skews the results.
If the spouse’s each make less than $524,000 per year then temporary New York State spousal support is calculated one of two ways. The first method subtracts 20% of the lower-paid spouse’s annual income from 30% of the higher-paid spouse’s income to determine support. The second method calculates the payments as 40% of their combined income minus the lesser-paid spouse’s income. Whichever value is lower is the temporary support. There is also a low income check to ensure the payor retains enough income for self-support.
While spouses make traditional incomes reported on W-2 forms, then it is a reasonable assumption that each person’s future income will be about the same. However self-employment income can complicate the calculations in ways the law can’t cover.
A self-employed spouse who saw the divorce coming could cut back on work to appear poor. The artificially lowered income is entered on the NY spousal maintenance worksheet and the temporary maintenance is calculated unfairly. Technically the spouse isn’t lying about income, just manipulating the formulas.
On the other hand the unpredictable nature of self-employment means maintenance payments that were fair for last year’s income are completely wrong for this year’s revenue. A spouse has a record year and is burdened with unreasonably high payments despite the fact revenues plummet the next year. An owner pulling the business out of a recessionary slump is making low payments that don’t reflect how the business grows over the next few months.
Some might say, “But it’s only temporary.” However the temporary maintenance calculated in a New York State uncontested divorce has a strong influence on the judge’s determination of a permanent maintenance agreement. An unfair temporary award can bias the final decision, resulting in a long-term unfair payment. Yes, the affected spouse can apply for a change but that takes time during which the unfair payments stand.
The way the law stands, there isn’t much that spouses or attorneys can do about the temporary maintenance award but they can be sure to present evidence to the court that demonstrates the temporary award is unfair so the judge will be more reasonable in the final decree.
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