How Self-Employment Affects Child Support

Child Support and Self Employment

Child support calculations are heavily based on income. For most people, this is done by using someone’s W2. Self-employed people don’t typically have W2s, making calculating child support more difficult.

There may be less readily available documentation detailing a self-employed person's income or revenue. Self-employed people may also try to hide income in their business to lower the amount they owe in child support.

An analysis of income in a child support case usually begins with tax returns. Tax returns usually give an insight into previous years' income, which can help give an idea of a self-employed individual’s earnings.

Where To Look For Hidden Income for Child Support?

A self-employed person can try to hide income or report earning less than they actually do in various ways. A family law attorney can help you review financial statements to find hidden income.

Office Expenses

It’s common for self-employed individuals to hide personal expenses as business expenses. For example, personal trips or hotel stays may be listed as business trips and paid for by the business.

Home Office Expenses

Furniture or computer equipment that is used for the home or entertainment can be listed as a business expense and paid for by the business. Understanding the type and role of the business can help determine what’s a legitimate business expense. For example, a roof repair company likely doesn’t have a business need for home theater equipment.

Advertising Expenses

In some cases, self-employed people list expensive personal property, like boats, in their business names and claim that it’s used for advertising when it’s really just used as personal property.

Payments

Sometimes, people make personal payments out of business accounts to hide income. For example, someone might pay for home lawn care from their business account. 

Understanding their standard of living can help identify if they’re paying for personal expenses from the business. Listing an income that’s well below their standard of living can draw attention to hidden payments.

Consequences of Hiding Income

The consequences of hiding income from child support calculations can vary based on the case. Individuals found to have hidden income may be ordered to pay fines or back child support, found in contempt of court, or ordered to pay the other party’s attorney fees.

If you believe that your children’s parent is hiding income to reduce child support payments, working with an attorney can help you get the full financial support you need for your children.

Contact a Family Law Attorney Today

Child support is an important factor in giving your children the life they deserve and the best standard of living possible.

If a parent is trying to hide income to avoid paying child support, this is a serious issue. You can do research into their financial situation to get the full amount of child support your children deserve.

Contact Campbell Law today to learn more about child support cases and how we may be able to help you.