If the non costodial parent opens an incorporated business, how is the child support calculated? Is it only on the parent salary or will the business income be calculated as well?
State/Country relating to question: Texas
Thank you for posting your question to JA/Pearl. Legal questions often take time for research or I may be offline so please be patient, I will reply.You can have the judge add the value earned by the business to the person's monthly gross income. Someone cannot avoid paying child support by purposely keeping down their income from self-employment. You would ask the judge to "impute" a gross income to them and you could include the value of "perks" such as a company vehicle.
How is the child support going to be calculated once an incorporated business its established? I know its 20% of the parent salary for one child. Will it be 20% of the business earnings or will it still be 20% of the parent salary?
It will be 20% of whatever the judge decides is the party's income in accordance with the child support guidelines. You will have to show what that income should be and that is a fact specific determination. For example, what if the business is losing money? This is where your attorney comes into play in showing that the party has income available to them from the business and that it should be imputed (added) to their salary. You may even need to hire a forensic accountant to examine the books of the business and make a determination. Usually it is salary, plus value of perks, plus average monthly income of the business where it is a sole proprietor.
will it make a difference if the business is incorporated rather than just a sole proprietor?
Not really unless there are other owners.
Attorney with over 35 years of business experience.
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