Self-Employment and Child Support: What You Need to Know

Child support in Orange County family law matter is a complex legal matter that takes a range of factors into consideration, including the amount of parenting time each of you has with the kids, the number of children addressed by the order, and each of your incomes. If your children’s other parent is self-employed, it can make these issues even more complicated. If you’re facing a child support case and your ex is self-employed, it’s time to consult with an experienced Orange County child support attorney.

Determining Income

A primary concern when it comes to calculating child support is each parent’s earnings. When both parents have steady jobs that involve them working for an employer and receiving a regular salary, this part of the process is generally straightforward. When one parent is self-employed, however, the matter is far less so.

In Orange County family law matters, each parent’s gross income is taken into consideration, which includes the following:

• Gross earnings, which include total salaries, wages, tips, unemployment benefits, bonuses, and disability benefits – rather than net earnings, or the amount taken home
• Other sources of income, including profits, dividends, and rents received

If your children’s other parent is self-employed, obtaining just child support that accurately reflects their actual income can be a difficult process, because their actual income may not be clear – and they may take steps to keep the matter murky. The bottom line is that, when one parent is self-employed, there are more opportunities to skew the state’s calculation process, which makes paying attention and working closely with a skilled child support attorney from the outset important.

State Law Is Evolving in Order to Keep Up

The State of California recognizes that self-employment can be a serious concern when it comes to handing down fair child support orders, and the issue is often litigated in family courts across the state. In the process, related laws are in a near-constant state of evolution. In recent years, there have been several landmark cases that directly affect how income generated by self-employment is treated, and these are the backdrop for current child support determinations.

Recent Court Findings

Recent court findings on the subject of child support afford insight into the state’s underlying principles, and this begins with California’s commitment to a strong public policy in favor of adequate child support. This means that hiding assets behind the screen of self-employment won’t be tolerated. The specific points made include each of the following:

• The state’s top priority is children’s best interests.
• Every parent’s first and most important obligation is supporting their minor children in relation to the parent’s own circumstances and station in life, which means higher earners are required to pay more child support.
• Each parent is responsible for supporting their children according to their own financial ability to do so, which requires an accurate accounting of each parent’s income.
• Children should share in the standard of living achieved by both parents, which makes it appropriate for child support to improve the standard of living in the custodial household in order to improve the children’s lives overall.

In other words, accurately assessing your ex’s income is key to receiving child support that is in keeping with California’s child-focused standards.

Your Ex’s Tax Returns May Not Tell the Whole Story

If you work for an employer, you receive a W-2 every year, and this reflects your job-related income for the year. And there’s little wiggle room on this matter when it comes to California’s child support calculation. If, however, your ex is self-employed, it’s a different matter.

Put simply, the IRS allows business deductions that aren’t considered appropriate when it comes to determining one’s child support obligation in the State of California. As such, turning to your ex’s tax statements may not adequately reflect their income for the purposes of child support. Additionally, self-employed parents have more leeway when it comes to the amount of income they report to the IRS, and some choose to cheat the system, which can artificially reduce their child support obligation.

If Your Ex Owns a Business

If your ex is self-employed, it can make it more difficult to pinpoint their income in order to calculate their actual child support obligation. If their self-employment is business ownership, the matter can be that much more complicated. Ultimately, the complexities of a business’s finances afford many opportunities to fudge the numbers, and getting to the bottom of the matter often requires forensic accounting.

Compelling Your Ex’s Business Taxes

The court handling your case can compel your ex to produce their business taxes, which can afford a window into their business’s gross income. This, in turn, can afford a better view of how much your children’s other parent is likely earning – and may include tell-tale signs that financial hijinks are a concern.

Assessing Earning Potential

If your ex is determined to be artificially limiting their child support obligation, such as by scaling back their business operations, by limiting their business hours, or by obscuring the amount they actually bring in, the court can take action. California courts have the discretion to calculate a parent’s income based on their realistic earning potential.

Turn to an Experienced Orange County Child Support Attorney for the Help You Need Today

If your ex is self-employed, it can make obtaining the child support that you’re entitled to on your children’s behalf far more challenging. Self-employment comes with a range of opportunities to limit one’s child support obligation, and the matter shouldn’t be ignored. The savvy Orange County child support attorneys at Minyard Morris are committed to fiercely advocating for your legal rights and for your case’s optimal outcome – in support of terms that reflect California’s focus on your children’s best interests. Your case is important, so please don’t wait to reach out and contact or call us at 949-724-1111 for more information about what we can do to help you today.