Is bonus or overtime pay considered in a child or spousal support order? Typically, the court will consider all income from any source derived. But, if bonus and overtime income fluctuates, the court may impose what’s know as a Smith-Ostler order. A Smith-Ostler order is in addition to a base spousal or child support amount which is determined based on a party’s base pay. In addition, a court can order a set percentage of bonus or overtime pay to be paid to the party receiving support. Typically, this percentage equals 13% of the bonus or overtime pay.
Consider this example, husband earns a base salary of $25,000 per month, and is awarded bonuses at the end of each fiscal year depending upon the company’s sales and revenue. This bonus is not a set amount each year. Under Smith-Ostler, a court can set a base amount of support based upon Husband’s $25,000 base salary, and, in addition, order Husband to pay 13% of any bonus he receives at the end of the year to Wife. This order will typically require Husband to provide financial disclosures at the end of each to prove the amount of the bonus received.
If you have questions about bonus income, overtime income, child support, spousal support or Smith-Ostler orders, call Morales Law today for a free consultation at (805) 422-7966.