If you're self-employed, you may find yourself wondering how this will affect your child support payments after a divorce in Pasadena.
For the purpose of child support, self-employment income is defined as gross profits minus legitimate operating expenses. This is not necessarily the amount from the Schedule C on your tax return, however. Certain expenses might be disallowed and added back into company profits, such as if the noncustodial parent's business is paying for his/her cell phone or car payment. Excess compensation to members of the parent's household might also be problematic.
Child support figures are calculated using monthly income. If your income fluctuates from month to month, you'll need to use your yearly income divided by 12. If your income has varied widely from year to year, you should discuss this issue with your attorney. The court might require you to use an amount based on more than one year's tax return.
If your ex thinks that you are not reporting your income properly, he/she might hire a forensic accountant to go over your business records. Because self-employment can provide opportunities for those who wish to hide assets, this is not uncommon and is often recommended to the former spouses of self-employed people as a preventive measure. However, if your records are in order -- and you do, in fact, have nothing to hide -- this is nothing to be concerned about.
Once your child support payments have been determined, keep in mind that they are not set in stone. If your self-employment income ever decreases, you can petition the court to lower your monthly payments. Payments are also affected by the amount of time you spend caring for your child, so any increase in visitation would qualify as a reason to reduce your payments.
How Can We Help?
Please call our office at (626) 683-8113 or email us at info@PasadenaLawOffice.com if you are a self-employed noncustodial parent in need of legal representation during your divorce. Our skilled Pasadena divorce lawyers are eager to advocate for the best interests of both you and your children within the California family court system.