How do I figure out how much money my spouse really earns?

Most people think of salary or a paycheck as earnings. But earnings can take many forms, and your spouse could hide them during a divorce (or in the pre-divorce planning stages). Be on the lookout for earnings in the following forms:

1. Salary deferred until after the divorce

Your spouse may defer a part of their salary until after the divorce. Look for letters or notes asking the employer or boss to defer income. Look at the past history of your and your spouse’s earnings. Check whether there is any unexplained reduction in income or failure to receive an anticipated or expected increase. For example, if your spouse is accustomed to receiving $50,000 per year in commissions and suddenly receives less (and this is not directly related to downturns in the economy), share this information with your attorney.

2. Expense accounts and other “perks”

“Perks” refer to benefits over and above direct compensation that a company may offer its employees. Some companies offer very little to none, while other companies’ perquisites are so valuable that they almost equal the salary they’re paying. Some of these “perks” are as follows:

• A company car for personal use: Your spouse may allege that the company car used for personal errands and socializing. Actually any use of a business vehicle for personal use is additional income and must be shown on your tax return.
• Paid parking space: Some companies pay all or a portion of their employees’ monthly parking rates. Your spouse may tell you that they are paying the parking expense directly. They may even pick up parking receipts off the floor of the parking garage or make a deal with one of the parking attendants to give him extra receipts. Keep this in mind when going over expenses.
• An expense account: Expense accounts range from small to large. Your spouse may have an expense account to take customers to fancy restaurants, sporting events, and other forms of entertainment. Look at the documents to see whether your spouse is taking clients to Burger King or other inexpensive restaurants and keeping a portion of each weekly expense account. He or she may charge all or most of his meals to his employer and tell you they are paying for food and expenses.
• Meal allowance: Some salesmen and executives may be allotted a “meal allowance” when they are on the road. Look into the expense receipts. Money may be held back and not spent on meals. For example, an employee may receive a flat sum of $50 per day when traveling. Instead of eating three meals and spending the $50, they may actually spend $20 per day and pocket the balance. This may not seem like a lot of money, but it could add up quickly. For example, if the person travels for one month, the total would be $930 ($30 per day times 30 days).
• Clothing and uniform allowance: Your spouse may be telling you that they need to buy one or more uniforms and have them cleaned when, in fact, his employer pays for this.

3. Bonuses

Many employees receive bonuses in addition to net pay. Look for deals in which your spouse gets partial bonuses and the other portion is put into a separate account accruing to the benefit of the employee. Bonuses can be deferred for future distribution. Look for a pattern of bonus payments in the past.

4. Vacation or business trip

Does your spouse’s employer pay for days at hotels when the business part of the trip has been completed? Some employees are allowed to take their spouses on business trips. An employer may allow use a summer home or other “getaway” owed by the business. This has economic value and should be considered additional income.

5. Vacation pay

If your spouse gets four weeks’ vacation and only takes two weeks off, he or she may receive two weeks’ additional pay. Be sure your attorney checks tax returns, W2, and 1099s.

6. Sick days/personal days

If your spouse does not use personal days or sick days, additional income may result. Be sure your attorney checks tax returns, W2, and 1099s.

7. Stock options

A stock option is the right to buy stock of a company at a reduced rate. Whether or not your spouse exercises this option, they are additional compensation.

8. Country club and health club

Your spouse’s employer may pay for membership directly (reimbursement) or indirectly (pay membership). This should be considered additional income.

9. Loans

If your spouse wants to increase family debts and look “poor”, he or she may create a loan with a friend, employer, or family member. He may not have to pay it back, but he will tell you that he owes this money. Insist on documentation of the loan and proof of any payments.

10. Special arrangements with employer

You are looking for possible signs that your spouse may have a special arrangement with their employer. For example, an employer may pay some of personal expenses or a percentage of the profits. Also check whether your spouse owns a percentage of the company and is, therefore, not an employee but an owner/employer.

Ann O’Flanagan is an attorney who handles family law exclusively in Flanders, New Jersey.