Can Child Support Be Based on My Wife's Business Income?

by Teo Spengler

State and federal taxing authorities may distinguish between different types of income and treat them differently, but income is income as far as child support is concerned. Family law courts generally look at all types of revenue generated by a couple when calculating child support. If your soon-to-be former spouse earns business income, it may be included in determining her share of child support.

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Child Support Determination

Parents of minor children have a legal duty to provide financial support until the children are emancipated. Each state has its own methods of determining how much support a child needs and how that amount should be divided between the parents. Most states take into account the amount of income each parent receives in determining the amount available for the children's support each month. Generally, only the income of the children's parents are considered for child support purposes, not the income of new spouses.

Revenues Included

A parent's paycheck might be the starting point for determining income for child support purposes, but the inquiry does not end there. Most types of income are included, from disability benefits to business income. The Indiana child support guidelines are typical in including everything from wages to severance pay, trust income and Social Security benefits. The guidelines also consider alimony received from other marriages.

Business Income

If the mother of your children is a business owner, the income she receives from the business likely will be included in her income for child support purposes. Generally, states do not rely on taxable income but use gross business receipts minus expenses required for the business operation. Such tax deductions as investment tax credits are specifically disallowed, while expense reimbursement or personal use of business property (such as club dues or company cars) can be added into a parent's income in some states.

Apportioning Child Support

In many states, the first step to ordering child support payments is to determine the amount of the parents' combined income that should be used to support the children. States use their own guidelines to make this determination. After that, this support amount must be apportioned between the parents. Many states divide the support obligation between parents by reference to the percentage of the combined income each earns. For example, if the total support amount is $1,000 and one parent earns 25 percent of the combined income, his share is $250 a month and the other parent's share is $750 per month. A parent with sole physical custody of the children is typically not required to make the apportioned payment to himself; it is assumed that he is contributing at least the apportioned amount.