Self-employed income must be reported so that the court can properly calculate child support. However, you need to be careful to make sure that you include all income that you have earned, whether self-employed income or not. After deducting necessary expenses, you will come up with your “net income,” which is the income used for child support calculations. To get a good estimate of how much you can expect to pay, you should use a calculator.
Steps
Part 1
Part 1 of 3:
Calculating Your Net Income
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Identify all sources of self-employed income. Typically, you have to report all self-employed income, which can come from a variety of sources. For example, the following are examples of self-employed income: [1] X Research source
- If you are an independent contractor, then you need to count anything reported on a 1099-MISC as well as any amount of money you have been paid, even if it wasn’t reported to the IRS.
- If you own a corporation, then you need to include your business income. You might be the owner of an LLC, PC, S-corp, or C-corp.
- If you are a partner in a business, then you are also self-employed. You will know if you are partner if you receive a Form K-1 at the end of the year.
- If you own rental property, then you are also self-employed. The rents you collect count as self-employed income.
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Total your gross income. You need to go through and add up all of the income. This will give you a number that is your “gross income.” [2] X Research source You will not use your gross income in the calculation. However, it is your starting point.Advertisement
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Subtract self-employed business expenses. When you file your income tax return, you might make deductions for necessary and ordinary business expenses. Depending on your state, you might not be able to make all of these deductions when calculating child support. For example, in Tennessee, you cannot take a “depreciation deduction.” [3] X Research source
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Add other income. You have to report more than your self-employed income. You also need to report any source of income, no matter how small. People sometimes forget that they get income from more than one source. You will also have to add the following income: [4] X Research source
- Salaries and wages
- Pension income
- Income from trusts and estates or annuities
- Social Security benefits
- Veterans’ or military personnel benefits
- Alimony from a spouse
- Unemployment insurance benefits
- Disability benefits
- Workers’ compensation benefits
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Subtract required deductions. In order to arrive at your “net” income, you also can make certain deductions, which will depend on your state. For example, in Illinois, you can deduct the following: [5] X Research source
- Federal and state income taxes
- Social security tax
- Any retirement contributions that are mandatory
- Any union dues
- Health insurance premiums
- Necessary medical expenses
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Part 2
Part 2 of 3:
Estimating Your Child Support
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Use a calculator. Once you have your net income, then you can get an estimate of how much child support you will pay by using a calculator. There are many calculators on the Internet, and you should find a state-specific calculator. You can find them in a variety of places:
- Some websites, such as Alllaw, have a calculator for every state: http://www.alllaw.com/calculators/childsupport
- Your state may have a calculator hosted on a state website. For example, you can find Indiana’s calculator at the state’s Supreme Court website. [6] X Research source
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Find your state’s formula. Most states have a formula which they use to calculate child support. The formula typically considers your gross income and the number of children that you need to support. You can find the formula online and use it instead of a calculator to estimate your child support payments.
- For example, in Texas, you will need to pay 20% of your net income for one child, 25% for two children, and 30% for three children.
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Analyze what other factors judges consider. Many states allow a judge to adjust the amount of child support depending on other factors. The judge will use the formula as a starting point but may adjust up or down depending on the circumstances. The precise factors will differ depending on your state. However, they could include the following: [7] X Research source
- Specific needs of the child, such as day care, educational expenses, and health insurance
- The incomes of both parents
- The ability of the paying parent to pay child support
- The child’s standard of living before the separation
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Part 3
Part 3 of 3:
Preparing to Calculate Your Income
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Read your state law. Every state law is a little different, so you need to read up on how your state in particular will calculate child support, and what kinds of deductions they allow. Although states may be generally the same, there will be individual wrinkles to each state’s laws.
- You can find your state’s law online. Search “child support” and “your state.” Look for state government websites which publish this information.
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Ask an accounting professional questions. You might need help calculating your business income. If so, then you should seek the help of an accounting professional, such as a certified public accountant. You can find a qualified accountant in the following manner: [8] X Research source
- Ask friends, family, and business colleagues if they would recommend their accountant.
- Search in the Yellow Pages.
- Get a referral from your state’s Society of Certified Public Accountants. Your state’s Society should have a website.
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Meet with a lawyer. A family law attorney can advise you how to convince the judge to adjust the guideline amount up or down. A family lawyer can also represent you in court if there is a lot of money in dispute.
- You can find a lawyer by contacting your state’s bar association and asking for a referral.
- Once you have the name of someone, you should call them up and schedule a consultation. Ask how much the consultation will cost.
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References
- ↑ http://memphisdivorce.com/self-employed-parents-income-determination-in-tennessee-child-support/
- ↑ http://memphisdivorce.com/self-employed-parents-income-determination-in-tennessee-child-support/
- ↑ http://memphisdivorce.com/self-employed-parents-income-determination-in-tennessee-child-support/
- ↑ http://family.findlaw.com/child-support/child-support-determining-parents-income.html
- ↑ http://www.divorcenet.com/resources/child-support/child-support-basics/child-support-illinois.htm
- ↑ https://mycourts.in.gov/csc/parents/
- ↑ http://www.nolo.com/legal-encyclopedia/calculating-child-support-faq-29150-2.html
- ↑ https://www.entrepreneur.com/article/217784
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