Salaried and 6 month income average

[cyn5]

Both me and my spouse are salaried employees, paid every two weeks. Well in the last six months, we each of course received 3 paychecks in one month and when you average it out over 6 months, it makes our incomes look higher than it really is

How has everyone's lawyers dealt with this if you are salaried employees? It is so weird because our paychecks are exactly the same each pay period. If you are salaried, why do you have to take your average of all paystubs for the last 6 months? And plus the paystub for the first month actually is pay from the previous month since we are paid a week after the pay period closes, so perhaps lawyers should be looking specifically at the pay period dates and not the actual date you are paid?

[okiemom2008]

I don't think it matters if you were paid twice or three times. Just take the last 6 months and divide it by 6 and then times that by 2 to see if you are under or above means. Hope this helps

[StartingOver08]

Now you are trying to use logic? No, the BK code is not meant for that!

This is the reason for BK planning, just figure out the time period when you have 6 months without 3 pay periods per month or a min # of 3 pay periods in a month. Especially since you and your wife are paid the same way. You don't get to chose average pay/month, you have to use ACTUAL income over the six month period. There is no leeway on this.

[OhioFiler]

If you're paid bi-weekly you receive 26 paychecks per year. During 2 months you'll receive 3 checks and 10 months you receive 2 checks. The average over MOST 6 month periods will get you 13 paychecks which is 1/2 of the year and an accurate account of your earnings.

The BK courts look at individuals as a cash entity for accounting purposes which means they don't use an accrual method to determine wages earned but not paid. The IRS treats you the same way.

[okiemom2008]

Now you are trying to use logic? No, the BK code is not meant for that!

This is the reason for BK planning, just figure out the time period when you have 6 months without 3 pay periods per month or a min # of 3 pay periods in a month. Especially since you and your wife are paid the same way. You don't get to chose average pay/month, you have to use ACTUAL income over the six month period. There is no leeway on this.

Aren't the 3 paychecks in July and October? So if possible, wait until May to file

[OhioFiler]

Aren't the 3 paychecks in July and October? So you would be 6 months away from them at this point, I think anyway.

Take a calendar and highlight your paydays on it. You'll know exactly which months you get 3 checks.

If you receive a check on the 1st, 2nd and sometimes the 3rd of any month(if it has 31 days) you will end up with three checks that month. Of course the downside is you don't get paid the next month until the 13th, 14th or 15th!

[jennordhavn]

If you're paid bi-weekly you receive 26 paychecks per year. During 2 months you'll receive 3 checks and 10 months you receive 2 checks. The average over MOST 6 month periods will get you 13 paychecks which is 1/2 of the year and an accurate account of your earnings.

The BK courts look at individuals as a cash entity for accounting purposes which means they don't use an accrual method to determine wages earned but not paid. The IRS treats you the same way.

This is exactly what I was going to say. It is an accurate account of earnings since you receive 26 paychecks per year so 13 paychecks is 1/2 the year.

[spearmint]

This is a problem for me, too, as my income dropped 30K last November and I have to file ASAP!

[cyn5]

Well, first let me say...you guys are FAST with your responses:-) Thanks! Okay, I have 3 paychecks in January and spouse has three in Oct...we are both on opposite pay schedules, but both salaried. So, we are getting double dinged it seems by this.

So, if I "plan" and try to use 6 mos of pay where I do not get a month with 3 pay checks...guess what? The next time I will get 3 paychecks is July! So, if I bypass January then I have to use Feb-July and I am in the same boat. If I take my paychecks from the last 6 mos and divide by 6, I am am over because of the one extra paycheck in Jan that really isn't extra.

[cyn5]

If you're paid bi-weekly you receive 26 paychecks per year. During 2 months you'll receive 3 checks and 10 months you receive 2 checks. The average over MOST 6 month periods will get you 13 paychecks which is 1/2 of the year and an accurate account of your earnings.

The BK courts look at individuals as a cash entity for accounting purposes which means they don't use an accrual method to determine wages earned but not paid. The IRS treats you the same way.

My atty requested September thru Feb and I do not have 13 paychecks as one would think for all these months...I have 14 (due to the extra one in January. Are they supposed to go off of the pay period date (which is what my atty is obviously using) or the dates of the pay period? For instance for September, my first paycheck was deposited 9/12 but the pay period actually ended 9/6. So, this paycheck is for one week in Aug and one week in Sept. Perhaps my atty should be taking half of my pay out for that paycheck?

I give up.

[OhioFiler]

My atty requested September thru Feb and I do not have 13 paychecks as one would think for all these months...I have 14 (due to the extra one in January. Are they supposed to go off of the pay period date (which is what my atty is obviously using) or the dates of the pay period? For instance for September, my first paycheck was deposited 9/12 but the pay period actually ended 9/6. So, this paycheck is for one week in Aug and one week in Sept. Perhaps my atty should be taking half of my pay out for that paycheck?

I give up.

I looked at the calendar and saw you had 5 months with 2 checks and January with 3. That is 13 paychecks.

[cyn5]

I looked at the calendar and saw you had 5 months with 2 checks and January with 3. That is 13 paychecks.

You ae right OhioFiler...yes, I have 13 paychecks (I think I was fixated on having 3 checks in Jan). However, if I add up all my paychecks for those 13 paychecks, obviously divide by 13 and mult by 2 I get my correct monthly income. BUT, if I add them all up and divide by 6 (for 6 months, I get an inflated number (probably because when you think "6 mos" it is 24 weeks, not 26 for 13 paychecks). Does that make sense?

[momof3b1g]

You need to average your 6 months. If you get paid every 2 weeks. take your paycheck amount and times it by 2.15 This will give you your monthly income. It looks like you are making more but you are making more. You are just average those 2 extra checks into your monthly budget.
If you are close to median sorry but there is no way to get around it. If you figure your usual monthly amount(2 paychecks a month) times that by 12 thats not what you make a year. So you cannot use that.

[OhioFiler]

You ae right OhioFiler...yes, I have 13 paychecks (I think I was fixated on having 3 checks in Jan). However, if I add up all my paychecks for those 13 paychecks, obviously divide by 13 and mult by 2 I get my correct monthly income. BUT, if I add them all up and divide by 6 (for 6 months, I get an inflated number (probably because when you think "6 mos" it is 24 weeks, not 26 for 13 paychecks). Does that make sense?

Your second calculation is the correct one. It's not inflated.

Your thought process is a good one for budgeting purposes. Just use 2 paychecks per month as your income for budgeting and when you get a third check in any given month stuff it into a savings or investment account.