Bonuses, Divorce, and Support, Oh My! Part 2

The topic of bonuses is so broad it can easily fill two blog posts.  In my first post about bonuses, I focused on how bonuses play into the determination of interim support and child support.  Now, I discuss how bonuses play into equitable distribution.

If you are the dependent spouse, you are always better off with the bonus being considered and asset rather than income available for support.  This is because if you receive a bonus as income, you are likely to receive about 40% of it and you may pay taxes on your share as taxable support.  If, however, the bonus is considered an asset, you will receive 50% or more of it and you will not be taxed on receiving it.  Of course, either way, we are talking about the net bonus after your spouse pays taxes on it.

While every case is different, generally, whether a bonus is an asset or income depends on when it is earned.  If your spouse received their bonus in January 2018 based on their 2017 performance, we would examine when you separated to determine how to characterize the bonus.

If you separated in January 2018, the entire bonus would be an asset.  If you separated at the end of June 2017, half of the bonus would be an asset and half would be income available for support.

Bonus issues can be tricky.  Several factors can impact your outcome.  It is best to have representation to navigate you through these issues.

If you would like to discuss this and other divorce-related issues, here is how to get started.  Also, read about what to expect at an initial consultation.



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