Hi - thanks in advance for any advice given…perhaps this question has been asked before.
Does a self-employed billable contractor use their gross income (before taxes, deductions, expenses) or net taxable income as part of a child support calculation?
Background:
I’m happily divorced with school-aged children and I’m about to ask my ex for a child support modification since it’s been over three years. He’s a self-employed government contractor who travels quite a bit as part of his job and from what I can tell is compensated very well for the work he does. I suspect he works about 1500 hours /year and bills hourly, perhaps anywhere between $100-150/hour. He also incurs a lot of job-related expenses (travel, supplies, etc) which I’m assuming he also bills back to the government.
He is trying to tell me his taxable income (minus expenses, deductions, etc) is all he needs to input into the calculation. Does anyone know if that’s true, or is there any other figure that a business owner like him should use? Gross income before taxes, expenses, and deductions?
Thanks in advance!
Hi there - I was able to work out an agreement with the ex so I suppose this question is moot. I’d still love to hear the answer but I suspect it’s academic at this point. Thanks again for the service you provide to the community!
For child support purposes, a self-employed person’s gross income is gross receipts minus ordinary and necessary expenses required in order to run the self-employed business. This is not the same as the taxable income.
Anna Ayscue
Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest
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