When Income Isn’t Straightforward: Calculating New York Maintenance for Business Owners, Professionals, and Variable Earners

If you’re going through a divorce and someone’s paycheck doesn’t arrive like clockwork every two weeks, calculating maintenance gets complicated fast. Business owners, self-employed professionals, commission-based salespeople, and anyone with fluctuating income face a challenge: there’s no simple number that tells the whole story.

Getting the income calculation right is critical. Miscalculate it, and you’re either paying too much or receiving too little for years. This is precisely where financial expertise matters most—and where litigation’s adversarial approach fails.

How New York Defines Income for Maintenance

New York ties maintenance income calculations to the definition in the Child Support Standards Act. The starting point is your gross income—essentially what you reported or should have reported on your most recent federal tax return.

The definition includes income from all sources: investment income, workers’ compensation, disability benefits, unemployment, social security, veterans’ benefits, pensions, fellowships, stipends, annuities, and even maintenance from a prior marriage.

Why Your Tax Return Isn’t the Final Answer

If you own a business or are self-employed, there’s probably a significant gap between what your tax return shows and what you’re actually able to spend. This is perfectly legal—tax law encourages business deductions. But when determining maintenance, we look at things differently.

New York adds back explicitly certain self-employment deductions: depreciation exceeding straight-line depreciation, and entertainment and travel allowances to the extent they reduce personal expenditures. But the analysis often goes deeper.

If your business pays for your car, cell phone, home office, meals, and travel, you’re receiving economic benefit even though these expenses reduce taxable income. For maintenance purposes, we need to recognize the economic value of these perks.

This is where having a mediator with an MBA in finance makes a real difference. Many mediators lack the background to analyze business financial statements properly. We can guide you through this analysis accurately.

Analyzing Business Financial Statements

When one spouse owns a business, look beyond the personal tax return to business tax returns and financial statements. Start with the business tax return—Schedule C for sole proprietors, K-1 from partnerships or S-corporations, or corporate returns.

For each expense category, ask: Does this represent actual business costs, or does it include personal consumption? Cost of goods sold, employee salaries, rent for separate business space, business insurance—these are real costs. Other expenses sit in a gray area. A business vehicle used 80% for business, and 20% personally, should have some portion added back. Business meals that are really your daily lunch? That’s personal consumption.

In mediation, we can discuss what represents sustainable business spending versus the income you chose to spend on the business. In litigation, competing financial experts present dramatically different analyses, and you’re gambling on which version gets accepted.

The Personal Consumption Test

Here’s a practical approach: look at lifestyle and spending. Suppose your tax return shows $60,000 in income, but you’re living in a $4,000-a-month apartment, driving a new luxury car, taking international vacations, and paying private school tuition. In that case, the numbers don’t add up. Something’s generating economic benefit beyond what the tax return shows.

In litigation, this becomes a battle of dueling financial experts. In mediation, we can have an honest discussion about lifestyle without adversarial posturing.

Create a monthly budget reflecting actual spending. Include housing, transportation, food, clothing, entertainment, vacation, insurance, and everything else. If that spending significantly exceeds what the tax return would support, there’s income flowing through that needs to be identified.

Normalizing Variable Income

For professionals with commissions, substantial bonuses, or fluctuating income, the challenge is determining a normalized income that reflects earning capacity without being artificially inflated by a single exceptional year or deflated by a single slow year.

The standard approach is a multi-year average, typically three to five years. But averaging alone isn’t enough—understand the trend. A salesperson whose commissions were $150,000 three years ago, $120,000 two years ago, and $90,000 last year has a different picture than someone earning $90,000, $120,000, and $150,000 over the same period.

Consider the reasons behind fluctuations. Was last year unusually low because of a resolved health issue? Was the prior year unusually high due to a one-time windfall? In mediation, we can discuss these nuances and agree on what represents sustainable earning capacity.

Investment Income and Distributed Assets

New York adds complexity: income from assets distributed in the divorce can be considered when calculating maintenance. If you’re receiving $500,000 in investment accounts generating $20,000 in annual income, that investment income may be factored into maintenance calculations.

This creates strategic considerations. If the lower-earning spouse receives substantial income-producing assets, it might reduce or eliminate their maintenance entitlement. If they receive illiquid assets, such as home equity, that don’t generate cash flow, the maintenance calculation might be higher.

The analysis requires understanding not just current income from assets but what they could reasonably generate. This is sophisticated financial planning that requires genuine expertise.

Imputed Income and Earning Capacity

New York allows the imputation of income based on former resources or earning capacity if someone reduced their income to avoid support obligations. This can apply to business owners who start taking lower salaries, professionals who suddenly scale back, or anyone whose income decline seems more strategic than genuine.

In mediation, imputation discussions can be more productive because we can discuss choices and motivations candidly. Did you genuinely pursue a lower-stress career for mental health, or are you trying to reduce support obligations? The goal isn’t to punish legitimate life choices, but to ensure support calculations reflect actual earning capacity.

Active Guidance Through Financial Complexity

When negotiating maintenance where income isn’t straightforward, transparency is everything. Gather comprehensive documentation: personal and business tax returns for three years, profit and loss statements, balance sheets, and business bank statements for business owners. For variable earners, gather pay stubs and 1099s.

We walk through financial statements together, identifying each business expense category and discussing whether each is a pure business cost or contains personal consumption. We don’t require you to have this figured out—we actively guide you through the analysis, bringing financial expertise to help you understand what the numbers mean.

Acknowledge uncertainty and build in flexibility. If income is probably between $120,000 and $150,000 but you can’t pin down an exact number, consider structuring maintenance that adjusts if actual income demonstrates you were significantly off.

Getting to a Number You Can Both Accept

The goal isn’t finding the “perfect” income number—it’s finding a number both parties view as reasonable given available information. Business owners often feel their income is being inflated, while their spouses feel the tax return understates real economic benefit. The truth usually sits in the middle.

Sometimes working backward helps. If you agree that a certain maintenance level feels right, reverse-engineer what income would produce that amount and test whether that number seems reasonable.

Why Financial Expertise Makes All the Difference

Calculating maintenance when income isn’t straightforward requires more than plugging numbers into a formula. It requires careful financial analysis, understanding of business operations, honest conversation about lifestyle, and willingness to look at multiple years.

This is precisely where many mediators fall short. Coming from legal or mental health backgrounds, they don’t have the training to properly analyze business financial statements, understand add-backs, normalize variable income, or assess whether lifestyle spending aligns with reported income. They might facilitate conversation, but they can’t guide you through the sophisticated financial analysis required.

With an MBA in finance, we can help you understand what Schedule C expenses should be added back, how to properly average variable income, what investment income assumptions are reasonable, and whether imputed income arguments have merit.

In litigation, you’re stuck with dueling financial experts presenting dramatically different income calculations designed to support their client’s position. The process is expensive, adversarial, and often produces unsatisfactory outcomes.

In mediation with genuine financial expertise, complexity becomes an asset. This deeper analysis often leads to stronger agreements because both parties understand and accept the reasoning. With sound financial guidance, transparent disclosure, and a collaborative approach, you can reach a maintenance agreement that reflects actual economic reality—exactly what financial expertise combined with mediation skill delivers.

The Mediation Advantage for Maintenance Discussions

Throughout these FAQs, you’ve seen references to mediation as an alternative to litigation. In litigation, attorneys fight over what guidelines produce and argue about how factors apply. You’re spending tens of thousands on adversarial processes that often produce outcomes neither party accepts. For co-parents, this poisons the relationship foundation you need for years ahead.

In mediation, you’re working together to understand what the guidelines say, whether they fit your circumstances, and what alternatives might work better. When you combine that collaborative process with genuine financial expertise—the ability to model scenarios, calculate present values, analyze tax impacts, and structure creative solutions—you get agreements that are both fair and sustainable.

That’s what makes the difference between maintenance arrangements that work and ones that create ongoing conflict.