If you are a noncustodial parent who works as an independent contractor, it's best to speak to an experienced attorney to clarify your child support payment obligations and the circumstances in which payments will automatically be withheld from your earnings. Please call our office at (626) 683-8113 or contact us online to speak to one of our Pasadena family law attorneys.
Collecting Child Support From an Independent Contractor
Pasadena divorce lawyers receive a number of child support payment questions each week, including questions about how child support is handled if the parent paying support does not work in a position where he or she is classified as an employee. If the parent paying support is considered an independent contractor, tracking or withholding income can be more complicated than if they were a regular employee.
Independent contractors are becoming common in many industries. For example, many companies hire independent contractors to provide marketing or technical support services. Independent contractors often work on a part time or temporary basis and may complete a portion of their work from a home office. These individuals are not considered employees because they do not have federal or state taxes taken out of their wages and receive no employer-provided benefits such as insurance or a retirement plan. However, their earnings may be subject to withholding for child support.
How Does a 1099 Affect Child Support?
Any business that is required to submit Form 1099-MISC for services received from an independent contractor must provide the contractor's earnings and location information to the Employment Development Department (EDD). The report must be completed within 20 days of paying $600 or more to the contractor.
However, the reporting requirement only applies to those who are doing business as an individual or sole proprietorship. Independent contractors doing business as corporations, general partnerships, limited liability partnerships, or limited liability companies do not have their information reported to the EDD.
Reports of independent contractor information are used to locate parents who are behind in their child support payments. The state has legal authority to request that child support payments be withheld from independent contractor income, although the withholding rate is different than the 50-65% rate used for employees.