THE IMPORTANCE OF AN INCOME AND EXPENSE STATEMENT
An income and expense statement is often used when determining spousal
support and/or child support. Both parties will typically need to complete
these statements. The income and expense statement will help you and your
attorney determine where your money is coming from and where it is going.
Having a firm understanding of your monthly income and expenses is essential.
The following items are commonly included in an income and expense statement:
- Your gross income from all sources. This includes bonuses, commonly worked
overtime, shift pay, rental income, and other non-employment income. You
will also need to list approximate amounts for the federal, state, and
FICA (Social Security and Medicare taxes) that are withheld from your income.
- Health insurance, life insurance, and required retirement payments.
- Your household expenditures such as your mortgage payments or rent, real
estate taxes, homeowners insurance, HOA dues, repairs and all utilities.
You will be asked about your motor vehicle(s) which will include monthly
loan payments, gasoline, repairs, auto insurance and personal property taxes.
- Any expenses for your children. This includes daycare, school tuition,
lunch money, school supplies, new clothing for the child and any child
- Health expenses are factored into the worksheet. You will be asked how
much you spend monthly on doctors, dentists, medication, etc. Often these
are not set monthly amounts, but rather occur at various times throughout
the year. Because of this, it is generally best to average out your costs
over the past year.
- There is a section for miscellaneous expenses, such as gifts, church/charity,
entertainment, vacations, hobbies, personal grooming, and legal expenses.
- If you have any expenses that don’t fall into one of the categories
on the sheet, you should write them in and explain them to your attorney.
It is vital for your expenses to be as accurate as possible!
Once the worksheet is completed you will subtotal your accumulated expenses
and subtotal your accumulated debt. This will determine your total expenses.
The total expenses will be subtracted from your net income which will
give you a positive or negative balance. This will determine your monthly
cash flow and will help you understand your choices during negotiations.
The income and expense statement can be submitted in court when necessary
so that the judge will understand your financial picture as well.