business silhouettes

Calculating child support is pretty straightforward most of the time.  Other times, it can be complicated.  One of those times  usually involves the situation of the self-employed payor.  There are numerous ways to "hide" income, or more popular, use the business to pay for most of the personal expenses of the payor.  Then the payor claims a disproportionately low amount of income and wants the court to set child support based on that income.

Wrong.  It can take some convincing of the judge, and normally a lot of digging, but it is sometimes possible to prove to the judge that the child support should be higher than what the payor is claiming on his tax returns.

The following Montana case is a good illustration.  Below is just a summary but you can click on the link in the previous sentence for the full opinion.

Do you think this guy regrets having his wife handle his bookkeeping for that one tax year?

Summary:  Imputation of income to self-employed husband in amount of $90,000, rather than using husband's tax returns showing taxable income of between $11,000 and $14,000, for purposes of establishing husband's child support obligation, was not abuse of discretion; tax returns were not only objective evidence of husband's income, husband's businesses required extensive travel, for which he took deductions for lodging, meals, and vehicle payments, businesses earned gross income ranging from $197,821 to $432,199, wife, who had done husband's bookkeeping for one tax year, offered exhibits supporting her assertion that husband netted $86,524 for that year after subtracting business expenses from sales, and parties had lifestyle that was inconsistent with husband's claim of income between $11,000 and $14,000.

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