If you’ve ever been involved in an Arizona family court case, you’ve probably heard the term “affidavit of financial information” or “AFI” as it is often referred. Pursuant to Rule 49, each litigant must file and exchange an AFI in all family cases involving child support, spousal maintenance, and/or requests for attorney’s fees.
A copy of the form used in Maricopa County can be found here.
What is an affidavit of financial information?
The AFI is an inventory of the individual’s income and expenses intended prove the financial factors at issue and to help the family court understand the parties’ relative financial situations. As its name implies, it is an affidavit, meaning its contents are sworn under the penalty of perjury. As mentioned earlier, it will be given to the opposing party or the opposing party’s attorney, so you should expect it to be carefully scrutinized for accuracy.
Income on an AFI
The AFI requires you to include all sources of gross income (before any taxes or withholdings). It will ask you to list what you make on a monthly basis. If you are paid biweekly, you multiply your gross pay by 2.165 to arrive at your monthly gross.
If you have variable income like tips, commissions, or bonuses, you should annualize those sources to accurately calculate your monthly income. In other words, if you receive one annual bonus of $12,000, you would list that as a monthly bonus of $1,000 even though it isn’t distributed to you that way.
You will also be required to attach the two most recent paystubs and the last three years of your tax returns.
Business Income vs. Personal Income
One of the most common questions comes from self-employed clients who confuse business revenue or income with personal income. The affidavit of financial information is only concerned with your personal compensation. So if you own an S Corporation, LLC, or another business entity, only list the money you pay yourself. For this and other legal reasons, it is essential that you maintain accurate and detailed business financial records.
Why are monthly expenses relevant?
Contrary to popular misunderstanding, the Arizona Child Support Calculator does not factor your individual monthly expenses. In other words, your car payment or mortgage will not reduce your child support obligation.
So why does the affidavit of financial information require you to list monthly expenses? It is to allow the judge to make discretionary financial determinations, such as child support deviations or awards of spousal maintenance and/or attorney’s fees.
Like income, you should annualize your monthly expenses when they are variable. A great example is your electricity bill. If you do not participate in the equalized payment plans, your bill in summer months may be several times more expensive than your bill during winter months. Try to annualize these expenses for the greatest accuracy.
Should you exaggerate monthly expenses?
Often the client’s first instinct is to exaggerate his or her monthly expenses to indicate that there is literally no disposable income from which the judge could award spousal maintenance or attorney’s fees. Unfortunately, doing so exposes you to risk during cross examination, particularly since the opposing party will likely have access to all of your bank and credit card records during discovery.
More importantly, if your accounting reflects that your monthly expenses are comparable to your monthly gross income, then the expenses probably exceed your monthly net income. This critical discrepancy may be impossible for you to reconcile and could give the opposing party an opportunity to request a higher income attribution consistent with your listed expenses.
For example, in a recent case a self-employed opposing party claimed he earned about $2,000 per month. However, his AFI actually listed about $4,500 in monthly expenses. At trial, we successfully asked the family court to attribute an income above $6,000 per month because that was how much would be necessary to afford his expenses and mandatory tax liability.
What about future monthly expenses?
If you do not currently incur certain monthly expenses that you anticipate you will incur before your family law case concludes, you can indicate what those costs are expected to be with an asterisk.
This commonly applies to spouses who are seeking maintenance and cannot afford to live independently until it is received. But it may also apply to a parent who anticipates a change in daycare or childcare costs when he or she returns to work or makes other life changes.