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3 ways a self-employed parent might underestimate income

On Behalf of | Mar 21, 2024 | Child Custody And Support |

Parents should report their income accurately to determine child support in Texas. However, for self-employed people, estimating income can be tricky.

Traditional employees receive regular paychecks. On the other hand, self-employed people often have fluctuating incomes. They may accidentally or purposefully underestimate their earnings.

1. Underreporting business profits

To reduce child support obligations, some self-employed parents may underreport their business profits. They may inflate business expenses or omit certain sources of income to portray a lower income level. However, this tactic, among others, can lead to serious legal consequences.

2. Failing to account for all sources of income

Self-employed parents often have multiple streams of income. For instance, they might get revenue from different clients, freelance work or side gigs. They must account for all sources of income when calculating child support obligations. This gives an accurate picture of their resources.

3. Maintaining spotty records and documentation

Proper record-keeping is necessary for accurately reporting income. However, self-employed individuals may not maintain thorough financial records. This can lead to discrepancies in income reporting. Without organized documentation, it is easy to overlook income sources or underestimate earnings.

Traditional employees receive W-2 forms. However, self-employed individuals may not have easily verifiable income documentation. This can pose challenges when proving income during child support proceedings. Without adequate documentation, it becomes easier for self-employed parents to underestimate their earnings.

Underestimating income for child support purposes can have serious consequences in Texas. Courts may impose penalties or sanctions against parents who deliberately misrepresent their financial circumstances. Additionally, underestimating income can result in an unfair distribution of financial responsibility for the child’s needs.

Parents must accurately report their financial circumstances to ensure fair and equitable child support determinations.


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