Child Support Obligations and Self-Employed Parents
The vast majority of divorced or unmarried parents recognize their responsibility to provide, at the very least, some level of financial support for their children. In most cases, the parent with less allocated responsibilities and parenting time is ordered to pay child support to the other parent in accordance with a formula provided in the law. For a parent who works for an employer and draws a regular paycheck, these calculations are generally straightforward, since they are determined as a percentage of net income based on the number of children to be supported. When the supporting parent owns a business, however, determining his or her actual income can be considerably more complex.
Mixing Business and Personal Income
Whether it is done with the intent of avoiding child support or claiming tax advantages, those who are self-employed often do not keep business and personal interests completely separate. They may use business revenue to cover day-to-day living expenses, essentially claiming no “take-home” income. Virtually all income and expenses are assigned to the business.
Regardless of the ethics involved, this type of situation also makes child support calculations more difficult, since the law in Illinois requires that child support payments are to be based on the paying parent’s net income. A self-employed parent with a successful business who does not claim very much personal income may think he or she can avoid large support obligations.
The Power of the Court
When calculating child support, an Illinois court has the authority to require a supporting parent to produce all financial statements related to his or her personal income and that of his or her business. The court must take into account how the self-employed parent keeps records, how intertwined business and personal income are, and whether assets were transferred to the business with the intention of affecting the child support proceedings. Such criteria may be considered even if the parent shares ownership in the company with other owners or partners. Once the parent’s actual income has been determined, the court can then proceed to make the appropriate calculations for the support order.
If you are involved in a child support proceeding that has become more complex than you expected, it is not too late to seek help. Contact an experienced family law attorney in Kane County to get the assistance you need. Call 630-232-9700 to schedule a confidential consultation with The Law Offices of Douglas B. Warlick & Associates today.