Independent Contractors and Self-Employed Parents: Navigating Child Support in New York

Determining child support for self-employed parents and independent contractors in New York presents unique challenges. Income can be irregular, business expenses may be intertwined with personal expenses, and traditional methods of income verification may not apply. Our skilled attorneys at Veridian Legal understand these complexities and can help you achieve a fair child support outcome.

Challenges of Calculating Child Support for Independent Contractors and Self-Employed Parents

Unlike traditional employees who receive a regular paycheck and a W-2 form, self-employed individuals and independent contractors often have fluctuating incomes. This can make it difficult to determine a consistent income figure for child support calculations. Additionally, there's a higher potential for business and personal expenses to be mixed, further complicating the process of determining accurate income for child support purposes.

How Personal Expenses Impact Child Support

When a parent is self-employed or an independent contractor, they may use business funds to pay for personal expenses. This can artificially lower their reported income and reduce their child support obligation. To address this, courts often "add back" these personal expenses to the parent's income when calculating child support. Common examples of expenses that may be added back include:

• Cell phone bills

• Car payments and expenses

• Meals and entertainment

• Mortgage payments

• Vacations and travel

It's crucial for self-employed parents and independent contractors to maintain clear and separate records for business and personal expenses to ensure accurate child support calculations.

Defining Self-Employment for Child Support

For child support purposes, self-employment generally refers to individuals who earn income through their own business or trade, rather than working as an employee for someone else. This can include sole proprietors, partners in a partnership, or shareholders in an S corporation or LLC. If a significant portion of a parent's income comes from their ownership share in a company, they may be considered self-employed for child support purposes.

Determining Self-Employment Income for Child Support

Determining income for self-employed individuals involves considering various factors, including their take-home pay, capital gains, and business deductions. While certain business expenses are deductible, it's important to distinguish between legitimate business expenses and personal expenses disguised as business expenses. The court may also scrutinize entertainment and travel allowances to determine if they are truly business-related or contribute to a parent's personal lifestyle.

Addressing Cash Payments and Under-the-Table Income

Some independent contractors or self-employed individuals may receive a portion of their income in cash or "under the table." This can make it difficult to track and verify their true income. Courts have the authority to impute income—estimate income based on factors like lifestyle and expenses—if they suspect a parent is not accurately reporting all their income.

Using Technology to Uncover Hidden Income

In today's digital age, financial transactions can leave a trail online. Veridian Legal utilizes technology and legal tools like subpoenas to access financial records, bank accounts, and online payment platforms to uncover any hidden income that might affect child support calculations.

Forensic Accounting in Child Support Cases

For complex cases involving substantial assets or intricate business structures, a forensic accountant may be necessary to analyze a parent's financial situation. These experts can examine business records, tax returns, and financial statements to determine an accurate income figure for child support purposes.

Self Employed Income FAQ

• What if my income varies greatly from month to month? We can help you present evidence of your average income over time or explore alternative support arrangements that account for fluctuations.

• How can I prove my expenses if I don't have receipts? We can help you gather other forms of documentation, such as bank statements or credit card statements, to support your claimed expenses.

• What if the other parent accuses me of hiding income? We can help you defend against these accusations and present evidence to demonstrate the accuracy of your financial disclosures.

• Can the court force me to hire a forensic accountant? The court has the authority to order a forensic accounting evaluation if it's deemed necessary to determine income.

• How can I protect myself if I'm paid in cash? Maintain meticulous records of all income and expenses, even cash transactions, to demonstrate transparency and accuracy.

• What if I'm a freelancer with multiple income sources? We can help you combine income from various sources and ensure accurate record-keeping to support your child support case.

• Can I deduct business expenses related to my home office? Certain home office expenses may be deductible, but it's important to understand the rules and how they might affect support calculations. We can advise you on this.

• What if my business is losing money? Do I still have to pay child support? Even if your business is not profitable, you may still have a child support obligation. The court will consider your overall financial situation, including any other income sources or assets.

• How does the court handle income fluctuations in seasonal businesses? The court may average your income over time or consider other factors to determine a fair child support amount in cases of seasonal employment.

• What if I receive tips or commissions as part of my self-employment income? It's important to accurately report and document all forms of income, including tips and commissions. We can help you ensure this is done correctly.

Do I Need an Attorney for Child Support Cases Involving Self-Employment or Independent Contractors?

Yes, it is highly advisable to have an experienced attorney represent you in these cases. An attorney can help you:

• Accurately present your income and expenses.

• Negotiate a fair child support agreement.

• Protect your rights if the other parent is trying to hide income.

• Understand the complexities of the Child Support Standards Act as it applies to self-employment.

Contact Veridian Legal for Expert Assistance

Child support cases involving self-employed parents and independent contractors require specialized knowledge and experience. Veridian Legal's attorneys can help you navigate the complexities, gather the necessary evidence, and advocate for a fair child support outcome. Contact us today for a consultation at (212) 706-1007 or info@nycfamilyattorneys.com.