While child support is a set calculation, arriving at the combined parental income is not as simple as doing your taxes. For example, just because somebody says, “My tax return states I made $80,000 last year” doesn’t mean they did. Child support payment calculations are not the same. The court will expect you to prove your income, much like an IRS audit. The court may want to see your W-2s and 1099s, in addition to your expenses if you don’t take the standard deduction but file the long form.
If you have business expenses on your individual tax return (via your Schedule C), or a corporate tax return, the other parent is entitled to see the supporting documents. Thus, actual income less allowed expenses and including business earnings can cause the amount of child support to be contested.
For example, the court (or opposing counsel) might say, “In addition to seeing your bank statements, we also want to see the receipts and invoices for your business expenses because we want to be able to make sure they are legitimate business expenses.” Even the IRS audits individual taxes because people deduct the expense of personal meals, personal rent, or a portion thereof. They’ll claim their personal car as a company car and use that as a deduction on a tax return. People even deduct their personal utilities and claim them as business utilities. This happens more often when people operate businesses out of their own houses.
Another item to explore is if you say you have a business, where do you operate that business? If it’s operated out of your basement and you’re claiming your electric bill as the business expense and taking it as a deduction, that would be a deduction for child support purposes. However, how can you prove you are paying the electric bill – and what portion is attributable to your business versus your personal use?
These examples are some of the many issues that show how parental income can be contested and further explored in pretrial disclosure.
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