Self-employment can make child support calculations feel less straightforward. Instead of relying on a regular paycheck, you may have income that changes from month to month, company expenses to account for and money coming from several sources. If you own a business or work for yourself, you may wonder which parts of your income actually affect your support obligation.
Here are the main factors to consider.
Business income and expenses
Your business revenue does not automatically equal the income used to calculate child support. Texas law includes self-employment income when determining your net resources, while allowing deductions for ordinary and necessary expenses required to produce that income. A court may also look more closely at certain tax deductions when deciding whether they accurately reflect the income available for support.
For example, a business owner who brings in $200,000 in revenue cannot necessarily treat the entire amount as personal income. The calculation accounts for appropriate costs involved in producing that revenue.
Income from other sources
Income outside your business can also affect the amount of support you pay. Texas law includes several types of income and resources, including:
- Interest and dividends
- Net rental income
- Bonuses and commissions
- Retirement benefits and pensions
- Capital gains
These especially matter when you have a business plus investments, rental properties or other significant sources of income.
Financial records
Accurate records help establish what you actually earn through self-employment. Tax returns, business statements and account records can help show revenue, expenses and other income.
Keeping these records organized can also help address questions about income that does not appear on a traditional paycheck.
Fluctuating business income
Your income may change throughout the year, so Texas law generally calls for an annual calculation of gross income when feasible and then averaged into monthly income.
That approach can help account for seasonal work or months when your business earns unusually more or less than usual.
Other financial resources
Your overall financial resources can matter when your business income does not tell the whole story. A court may consider resources such as investment income, rental income and other amounts you actually receive when determining the resources available for support.
Take a closer look at your financial picture
Self-employment does not automatically lower or increase your child support obligation. Your business income, allowable expenses, other income and financial records can all affect the calculation. If you have a business or multiple income sources, reviewing those records with an attorney can help you understand how Texas child support rules may apply to your situation.