Understanding Self-Employed Income for Child Support and Alimony in Georgia

When navigating child support and alimony in Georgia, self-employed individuals often face unique challenges. Unlike traditional employees with regular paychecks, self-employed income can fluctuate, making it harder to calculate a consistent figure for support obligations. In this blog post, we’ll break down what counts as income for self-employed individuals in Georgia, what can be excluded, and how the courts approach these calculations.

What Qualifies as Income for Child Support and Alimony?

Under Georgia law, income for child support and alimony purposes includes a wide range of earnings. For self-employed individuals, this generally encompasses:

1. Gross Receipts: All revenue generated from business operations, freelance work, or independent contracts.

2. Salaries and Wages: If the self-employed individual also pays themselves a salary from their business.

3. Bonuses and Commissions: Irregular payments tied to performance or project completion.

4. Dividends and Interest: Income from investments or savings accounts.

5. Rental Income: Earnings from property or real estate rentals.

6. Capital Gains: Profits from the sale of assets or investments.

7. Business Perks and Benefits: Personal expenses paid by the business, such as car payments, cell phone bills, or meals, may also be included.

Essentially, any income stream contributing to the individual's financial resources is generally considered.

Allowable Deductions for Self-Employed Individuals

While gross income is the starting point, self-employed individuals can deduct reasonable and necessary business expenses to determine their actual income for child support and alimony calculations. Some common deductions include:

• Rent or mortgage for business premises

• Employee salaries and benefits

• Office supplies and equipment

• Insurance premiums related to the business

• Necessary travel expenses

However, personal expenses disguised as business expenses will likely be scrutinized by the court and could be added back to the income calculation.

What Might Be Excluded from Income Calculations?

Certain income sources are typically excluded when calculating child support or alimony, such as:

1. One-Time Gifts or Inheritances: Unless they generate ongoing income.

2. Certain Retirement Contributions: If they are reasonable and consistent with prior contributions.

3. Loans: Unless they are forgiven or considered disguised income.

Courts will carefully examine these exclusions, particularly if there’s any suspicion of income being intentionally hidden.

Challenges in Determining Self-Employment Income

Self-employed individuals often face added scrutiny when it comes to income reporting. Common challenges include:

• Fluctuating Income: Seasonal work or project-based income can make annual calculations difficult.

• Business Expense Manipulation: Courts may disallow questionable deductions.

• Cash Payments: Cash income that isn’t properly reported can trigger penalties and legal consequences.

Best Practices for Self-Employed Individuals

If you’re self-employed and navigating child support or alimony obligations in Georgia:

• Keep thorough and accurate financial records.

• Work with a financial professional to prepare profit and loss statements.

• Be transparent about all income streams.

• Avoid commingling personal and business expenses.

Conclusion

Calculating self-employed income for child support and alimony can be complex, but transparency and proper documentation are key. If you're self-employed and facing a divorce or support dispute, consulting with an experienced family law attorney can ensure that your income is accurately represented and your obligations are fair.

At Shannon Davis Legal, we specialize in helping clients navigate the complexities of family law, including cases involving self-employment income. Contact us today for guidance tailored to your unique situation.