Income Analysis in Oregon Divorce Mediation
Income in an Oregon Divorce: The Short Version
In an Oregon divorce, both parties' incomes and budgets are relevant. They establish each party's needs, resources, and the standard of living that the couple or family enjoyed during the marriage.
Virtually any earned income or investment income counts as income, including, but not limited to:
The examples above are not an exhaustive list. Matthew will discuss the various income sources with you when you begin mediation.
Virtually any earned income or investment income counts as income, including, but not limited to:
- W-2 income from work
- Self-employment income
- Dividends
- Bonuses
- Interest
- Capital gains (with exceptions)
- Trust distributions (with exceptions)
The examples above are not an exhaustive list. Matthew will discuss the various income sources with you when you begin mediation.
Why Does Income Matter in an Oregon Divorce?
In an Oregon divorce, you will be settling issues of asset division, debt division, child support, spousal support, child custody, parenting time, tax matters, and insurance changes, among others. Here's how income is relevant to those topics:
- Whether an income-producing asset is transferred to one spouse or the other or maintained as a joint asset in which both parties share the income will determine the fairness of the overall asset division.
- It is always important to ensure that the spouse who will keeping a particular asset can afford its upkeep, if any.
- If the parties own an asset that will likely increase in value over time but requires monthly "feeding" in the meantime, such as a rental house whose mortgage payment is higher than the rental income received, you will need to assess in mediation whether the spouse who will own it after the divorce can afford that additional cost.
- Each party's respective income from all sources is a major factor in determining the amount and duration of spousal support.
- Each parent's gross income is one of the essential line items on the Oregon Child Support Guidelines Calculator.
- Each parent's net income from all sources (not always obvious from the income documentation, but Matthew can calculate it) is commonly used to apportion the additional expenses (such as extracurricular actities) that parents often share but are not expected to come out of regular child support.
- It is crucial to ensure that each parent can afford his or her expenses and his or her responsibilities to the children under the agreed-upon parenting plan.
Discovery: Documents Needed for Divorce Mediation
Each source of income differs in its taxation, consistency, and other factors. To assess how useful and lasting each source of income will be to ensure your and your family's financial stability after the divorce, it's important to know:
For each source of income, you will provide documentation that shows the name of the employer, the type of income, the amount received, and any taxes or other withholdings subtracted from the gross pay.
- How often the income is received and whether it is consistent or seasonal
- Whether taxes are withheld or whether you'll have to set aside money for the taxes owed
- Whether the net pay from a pay stub is accurate for divorce purposes
- Whether the number of dependents on your pay stub or tax return will change for the next tax year
- The effect of the upcoming change in your tax filing status on your net income
For each source of income, you will provide documentation that shows the name of the employer, the type of income, the amount received, and any taxes or other withholdings subtracted from the gross pay.
How Does Debt Relate to Income in Divorce Mediation?
If any debt payments are deducted directly from your pay stub, or if you have debts specifically associated with your income source, such as repayment of a 401(k) loan, Matthew will look at how those payments affect the net pay and how long they will continue.
Common Mistakes or Oversights
- Not including all income sources
- Confusing or conflating gross and net income
- Not considering the Social Security maximum
- Misinterpreting paystubs when calculating net pay
- Not accounting for differences in how various sources of income are taxed
- Not accounting for recent or upcoming job changes properly
- Not adjusting tax withholdings properly in calculations of net pay
- Including deductions from net pay that should be excluded, and vice versa
How Mediator Matthew House Will Assist You
Matthew will ensure that all of the above mistakes and oversights are avoided. He will accurately account for each party's respective gross and net incomes for divorce-related purposes.
What to Prepare
Matthew will need documentation that shows the type, source, taxation, and deductions of each source of income. He will provide you with more specific requests for information after you become a client.