• calendar15th Jan 23 10:00 pm
  • userJamie

What Is Income for Purposes of Calculating Maintenance?

The State of Colorado generally prefers the term spousal maintenance over alimony, but the meaning is similar. When divorce leaves one spouse facing a financial deficit while the other has the ability to provide financial assistance, spousal maintenance may be ordered. When this is the case, both the payor and the payee’s income is taken into consideration, and as a result, it is important to have some working knowledge of what is income for purposes of calculating maintenance. To better understand how spousal maintenance may apply in your divorce, reach out to the Colorado Divorce Law Group at (720) 593-6442 for more information today.

Determining What Qualifies as Income

When determining what is income for purposes of calculating maintenance, Colorado looks to House Bill 18-385, and the process begins with each spouse’s gross income. Gross income refers to pretax income before any deductions or expenses are taken out of one’s paycheck. In addition to what the payor and the recipient earn in the form of a salary or wages, there are other sources of income that must be factored in, including all the following:

  • Income from self-employment
  • Commissions from sales
  • Bonuses earned
  • Dividends received
  • Capital gains
  • Retirement benefits already received
  • Social security benefits already received
  • Preexisting alimony awards received
  • Income from rent
  • Income or distributions from trusts
  • Unemployment insurance benefits
  • Disability insurance benefits
  • Gifts of money
  • Money won

The State of Colorado does a fairly exhaustive accounting of both spouses’ incomes prior to making alimony determinations.

Each Spouse’s Income

Calculating each spouse’s income for the spousal maintenance equation is a complicated process, but better understanding the primary factors can help.

Salary vs. Wage

The State of Colorado does not employ a specific definition of salary, but it is generally held to be mean the fixed, regular pay that an employee receives on a weekly, monthly, or semimonthly schedule. Employees who are paid by the hour, however, earn a wage. When an employee receives tips, they are included as income in the maintenance calculation.

Commissions and Bonuses

When it comes to which sources of income are included in the calculation of spousal maintenance, two of the most contested tend to be commissions and bonuses. Consider the distinction between the two:

  • Commissions are earned in direct relation to meeting specific goals, and they can be in addition to one’s base pay or can make up one’s entire pay.
  • Bonuses are generally discretionary amounts that reflect their recipients’ overall performance and are paid on top of their salaries. In addition to performance bonuses, there are dividend bonuses that are a function of the company’s profits.

In Colorado, both commissions and bonuses are considered income for purposes of calculating spousal maintenance. For additional guidance in relation to the complex matter of determining income for maintenance, consult with a dedicated divorce lawyer at Colorado Divorce Law Group today.

Overtime Pay

The matter of overtime pay in the determination of income for spousal maintenance is a more challenging issue. Consider the following guidelines:

  • Overtime pay that an employee earns as a result of volunteering to work additional hours generally does not apply toward one’s income for purposes of calculating maintenance.
  • Overtime pay that an employee earns as a condition of their employment, however, is considered income.

If, however, one or both spouses consistently earn overtime pay, it will likely be included as income in the maintenance calculation.

Capital Gains

While the term capital gains is typically employed for profits associated with financial tools like stocks and bonds, this category is much broader when it comes to the matter of what is income for purposes of calculating maintenance. Capital gains in this context refer to profits that are generated by selling an asset, such as any of the following:

  • Stocks and bonds
  • Investment properties
  • Items of value, such as artworks, jewelry, watches, or collections

The Matter of Inconsistent Pay

When one or both spouses earn variable incomes that fluctuate according to a range of factors, Colorado courts generally calculate an earnings average in order to determine projected future incomes. Since each spouse’s yearly income is employed in the spousal maintenance calculation, a fluctuating income may be averaged over three years in order to arrive at a reasonable income value for the spouse in question.

The Matter of Unemployment

If a spouse does not work at all –­ or works part-time – but could be working full-time, Colorado courts may deem the spouse underemployed and may impute their income as a result. Imputing income amounts to assigning an income in accordance with the spouse in question’s level of education and work experience. At the very least, the court is likely to assign the current minimum wage, which is considered universally attainable.

There are, however, instances in which the judge presiding over the spousal maintenance case will not consider a spouse who is earning less than he or she is capable of earning as being underemployed. These include:

  • If the spouse’s current employment situation is temporary and is intended to be a steppingstone toward achieving a higher salary in the near future
  • If the spouse’s low-paying job is considered a good faith career choice under the given circumstances
  • If the spouse is seeking higher education that amounts to a good faith effort to earn a degree or certification within a reasonable amount of time that will enhance his or her earning potential

Turn to an Experienced Colorado Divorce Attorney for Clear Guidance Regarding Spousal Maintenance

The trusted divorce attorneys at Colorado Divorce Law Group recognize how important your spousal maintenance order can be to your financial future and have the skill and experience to help you obtain a case resolution that upholds your rights and best interests and works for you. Because determining what is income for purposes of calculating maintenance tends to be a complicated process, our accomplished legal team is standing by to provide you with the assistance you are looking for. To learn more, please do wait to contact or call us at (720) 593-6442 today.