Posted by Nydia Streets of Streets Law in Florida Divorce

When a party is self-employed or otherwise can deduct certain business-related expenses on that party’s tax return, this is an important consideration in determining alimony and child support in Florida. In the case Brown v. Norwood, 5D18-3836 (Fla. 5th DCA February 28, 2020), the court considered the appeal of a former husband who argued the trial court ignored evidence of his business expenses in calculating his income.

The evidence on the trial level showed the former husband was a self-employed commercial truck driver. His tax returns submitted into evidence indicated he wrote off business expenses and the cost of goods sold, resulting in steadily decreasing net income to him over the years. After the former husband admitted he did not actually sell any goods, the court found that what he was reporting on his income tax returns was false. Accordingly, for purposes of calculating alimony and child support, the trial court imputed to the former husband his reported full gross income without any deductions.

The former husband appealed, arguing this was error. The appellate court upheld the trial court’s ruling about excluding the costs of goods write-off, but reversed as to other legitimate business expenses reported by the former husband. The court held “In this case, the trial court found that Former Husband lacked credibility with regard to the expenses for the cost of goods sold listed on his tax returns. Therefore, after reviewing the evidence, the trial court determined that any amount categorized under "cost of goods sold" should not be considered a necessary business expense. We affirm the trial court's findings in that regard and do not disturb the portion of the final judgment imputing that income to Former Husband. However, the trial court failed to give Former Husband credit for any other business expense that was separately listed on his financial affidavits or tax returns. The failure to consider Former Husband's other business expenses when calculating his income constituted an abuse of discretion.”

Careful examination of a party’s income in a Florida divorce case is important in arriving at correct figures for alimony and child support. Contact a Miami divorce lawyer for a consultation to understand how both may be calculated in your case.