Securing Fair Child Support When a Parent is Self-Employed in Illinois

 Posted on August 24, 2023 in Divorce

When a self-employed parent gets divorced in Illinois, determining accurate income for purposes of calculating child support can be challenging. However, state laws contain provisions to protect custodial parents and ensure child support orders are fair and representative of a self-employed parent’s true earnings.

Courts Can Compel Tax Return Disclosure

Family law courts have the power to compel a self-employed parent to fully disclose recent years’ tax returns to paint an accurate picture of gross business income. Judges can also subpoena personal and business bank statements if questions or discrepancies arise regarding reported income and business revenues.

Watch for Hidden Income Through Business Expenses

One common tactic of self-employed parents is hiding additional income by paying for many personal expenses through their business. This may include reimbursed meals, travel, entertainment, cell phone costs, and more. Courts will often add back these types of personal expenses to the gross income calculation.

Imputing Income Based on Earning Potential

If it appears a self-employed parent is purposefully limiting work hours or scaling back business operations to reduce child support obligations, judges have discretion to impute income based on realistic earning potential matching that parent's qualifications and experience. Self-employed parents must make good-faith efforts to earn at full capacity.

All Business Income Sources Are Included

When calculating gross income for child support purposes, Illinois family courts will aim to capture all money generated by the business, not just the owner's draw or salary. This includes dividends paid out and retained business earnings. Profit distributions, rental income, and royalties may also enter the equation. The goal is to determine total business income.

Seek a Professional Income Audit

If serious concerns arise regarding the validity of a self-employed parent's reported income on tax returns compared to lifestyle and business scales, a forensic accountant can be retained to conduct an audit and provide expert testimony to the court. This may be the only way to prove substantially underreported income.

Do not hesitate to aggressively pursue legal action if you suspect a self-employed ex is being misleading about their true income to minimize child support payments. Your children deserve fair financial support. With the right legal resources, true income can be proven.

Contact a Kane County Family Law Attorney

Navigating child support laws in Illinois can be confusing and complex. An experienced Illinois child custody lawyer can examine all aspects of your case and build a strategy to protect the financial interests of your children. Call Goostree Law Group at 630-584-4800 for a free consultation.

Source: 

https://hfs.illinois.gov/childsupport/parents/faqsnew.html

https://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2086