Navigating child support in Texas can be challenging, especially if you’re self-employed. Unlike traditional employment – where wages are straightforward and set to the cadence of a regular paycheck – self-employment income can be variable and less predictable.
In our state, child support calculations for self-employed individuals follow specific guidelines to ensure fairness and accuracy for both parties involved in a family law matter. Learn more about how self-employed child support works in Texas so that your rights are protected.
Understanding the Child Support Calculation
The primary goal of child support is to provide for the child’s needs, ensuring they receive a standard of living comparable to if their parents were together.
For self-employed individuals, calculating child support can be more complex due to fluctuating income and various business expenses. Consider the following key factors a court will look at when making a determination:
- Gross Income
- Deductible Business Expenses
- Net Resources
Inside the Key Factors in Calculating Self-Employed Child Support
The first critical factor is the gross income, which for self-employed individuals includes all earnings from business activities. This encompasses earnings from sole proprietorships, partnerships, or other self-employment ventures. Gross income also includes regular income, dividends, bonuses, and any other financial benefits received from the business.
Next, deductible business expenses are subtracted from the gross income to determine net earnings. These expenses might include supplies, office rent, utilities, and other necessary costs related to running the business. It is crucial to note that personal expenses disguised as business expenses are not deductible for child support purposes.
After subtracting deductible business expenses from gross income, the resulting amount is considered the net resource. According to the Texas Family Law Code, net resources include wages, salary, self-employment income, rental income, retirement benefits, and others. Taxes and social security contributions are further deducted from the net resources to calculate the final figure used for child support calculations.
Steps to Calculate Child Support for the Self-Employed in Texas
To determine gross income, it is vital to gather all income records – such as bank statements, tax returns, profit and loss (P&L) statements, and any other documentation showing earnings from the business.
Once gross income is established, business expenses should be separated from personal expenses, and only legitimate business expenses should be considered deductible. After calculating the net resources, any taxes owed are deducted to determine the final figure for child support payments.
Texas applies a guideline percentage to the net resources to determine your child support obligation. Typically, it is 20% for one child, with incremental increases for additional children.
Common Challenges in Calculating Self-Employed Child Support
Fluctuating income is a common challenge when making a fair determination about child support. Self-employed individuals often experience income variations, making it difficult to determine a consistent amount that should be paid each month.
For example, courts may average a parent’s income over time to provide a more accurate calculation. Additionally, the court may take a deeper dive into the business to ensure that a self-employed individual is not attempting to hide income by underreporting earnings or inflating business expenses.
Courts can scrutinize financial records and may impute income based on an individual’s lifestyle and spending habits. Business owners might also have complex financial structures, including multiple entities and diverse revenue streams, complicating the income assessment. In such cases, professional evaluation involving forensic accountants might become necessary.
Consulting a Child Support Lawyer
Given the complexities involved in calculating child support for self-employed individuals, seeking the guidance of a child support lawyer is a good idea. A professional can help ensure all relevant income is considered, legitimate expenses are deducted, and the final support amount is fair and just for all parties involved.
Whether you’re the party who will pay child support or the spouse who will receive child support, our family law attorneys can help protect your legal interests in the Texas court system.
Find Support from Our Family Law Attorneys
Determining self-employed child support in Texas requires strong attention to detail and an understanding of family law. Our attorneys know the process inside and out, will work with the judge assigned to your case to advocate on your behalf, and will help you receive a fair outcome when the child support order is issued.
We recommend starting with a consultation with one of our local attorneys to discuss your situation. We’ll review your options and help guide you toward the next steps in the process.
We currently represent parents who are self-employed in Fort Bend County, Brazoria County, Galveston County, and Matagorda County. If you live in one of these counties, contact our Angleton law office at 979-267-7660 or our Sugar Land office at 281-944-5485 to speak with an attorney. Let’s get started on your case today.