How Does My Self-Employment Affect Child Support Payments?

Child support is primarily based on the parent’s income. Court-ordered child support is a set amount to be paid every month. However, income for self-employed parents can vary widely from year to year. Self-employed parents may need to modify child support orders if there is a big change in their financial situation.

Child support guidelines are different in every state. To find out how self-employment impacts child support, contact a local child support lawyer for legal advice.

How Self-Employment Impacts Child Support

The noncustodial parent generally makes payments to the custodial parent to help provide for the child’s needs. Most states use child support guidelines to determine the amount of monthly support. Child support calculations take into account many factors, including:

• Parent’s income
• Number of children
• Child care costs
• Child custody arrangement
• The child’s healthcare needs

Assessing Income for Self-Employed Individuals

The biggest factor for determining the amount of child support is generally the parent’s gross income. Income includes money from any source in addition to employment income. Sources of income include:

• Wages and salary
• Self-employment income
• Commissions and bonuses
• Investment income
• Rental income
• Business income
• Social Security benefits

Many self-employed parents have variable monthly incomes. According to the Bureau of Labor Statistics, about 10% of all workers are self-employed. Self-employment can make it difficult to estimate income for child support purposes. A self-employed person could make $10,000 one month and no money the next month.

Business owners can generally deduct legitimate business expenses from their gross receipts to determine their net income available for child support. However, parents should keep good documentation to show the family court their estimated monthly income. If the court suspects the parent is hiding income, they can find the parent in contempt or issue penalties.

Documentation and Income Verification

Organized record-keeping and documentation can help estimate your average income for child support. You can demonstrate your average income using past tax returns and bank statements to show your annual gross income. If you are anticipating a significant change in your income for the upcoming year, explain your situation to the family law judge. The court can modify your child support obligations based on your financial records.

If there is a significant change in your financial circumstances, you can petition the family court to modify your child support orders. Either parent can ask the court to modify the amount of child support. If the child’s other parent has a very profitable year, you can petition the court for an increase in child support.

Managing Support Obligations While Self-Employed

If your child’s other parent is self-employed, they may encounter periods of lower income. Once the court issues child support orders, the paying parent is responsible for making those payments. A change in income does not change the amount of child support. Parents need to modify the child support orders before it will change their financial obligation. Even after getting a modification, the amount of past-due support does not change. Modifications are not retroactive.

Enforcing Child Support Orders With a Self-Employed Parent

If the self-employed parent is not making payments, they may blame it on lower income. However, they are still responsible for taking financial care of their child. You can start enforcement action to help recover back child support. Each state has child support services to help parents enforce support orders.

You can also talk to a family law attorney about enforcing child support orders. An experienced attorney can locate the other parent and get income withholding orders to make the parent pay. Child support enforcement options include:

• Wage garnishment
• Intercepting payments from clients (non-wage garnishment)
• Bank levies
• Placing a lien on their vehicle, house, or other property

Legal Guidance for Self-Employed Parents

If you are an independent contractor or business owner, your income can change from year to year. Documenting your income over time can help you estimate your average income to determine child support. However, you need to have evidence and documentation to back up your income statements. The court will look closely at your income to find any discrepancies or hidden assets.

When the court determines child support, they will manage the child support case based on the best interests of the child. For more information about how self-employment will affect your child support obligations, talk to a local child support attorney about your case.