By Julie Auerbach, AAML Penn Fellow | Astor Weiss Kaplan & Mandel, LLP
In any support case, the practitioner must identify all forms of income that fall within the state’s definition of income for support purposes. Income for support purposes is typically defined differently from income for tax purposes. Different states use different definitions of income. For example, some states include gift and inheritance as income for support purposes while others do not.
Pennsylvania defines income available for support as follows:
"Income." Includes compensation for services, including, but not limited to, wages, salaries, bonuses, fees, compensation in kind, commissions and similar items; income derived from business; gains derived from dealings in property; interest; rents; royalties; dividends; annuities; income from life insurance and endowment contracts; all forms of retirement; pensions; income from discharge of indebtedness; distributive share of partnership gross income; income in respect of a decedent; income from an interest in an estate or trust; military retirement benefits; railroad employment retirement benefits; social security benefits; temporary and permanent disability benefits; workers' compensation; unemployment compensation; other entitlements to money or lump sum awards, without regard to source, including lottery winnings; income tax refunds; insurance compensation or settlements; awards or verdicts; and any form of payment due to and collectible by an individual regardless of source.
23 Pa.C.S.A. § 4302.
Additionally, there are certain forms of income that may not be expressly included in a state’s statutory definition of income, but are included on the basis of case law.
Disputes often arise as to whether or not certain forms of income should be included in a support calculation. These “tricky” forms of income include phantom income, deferred compensation, business and employment perquisites, income from a trust, gift, or inheritance, and “paper only” deductions on tax returns. There are other forms of income that while may not be difficult to prove, may escape attention from the litigants, such as electronic forms of payments or the income of a spouse or partner as a basis to deviate from the support guidelines.
The first part of this presentation will discuss how to identify and include these tricky forms of income and sometimes overlooked forms of income in a support calculation. The second part of this presentation will discuss best practices in identifying and presenting these forms of income to the court.
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