Child Support Guidelines Are Statutory
Video Transcribed: How do you handle self-employment income when determining child support in Oklahoma? I’m Oklahoma attorney James Wirth. We’re doing a series of videos related to child support issues in Oklahoma. And this one regards how do you deal with self-employment income when determining gross income?
First off, when determining child support, use the Oklahoma guidelines, child support guidelines, and the most important factor in Oklahoma child support guidelines are the party’s incomes. But how do you determine incomes when somebody is self-employed? That’s the question.
And the child support guidelines are statutory. It’s under Oklahoma law, and you can find it under title 43. And for this particular issue, section 118 B, subsection D, regards self-employment income.
What it provides is that income from self-employment includes income from but is not limited to business operations, work as an independent contractor or consultant, sales of goods sold and rental properties, less ordinary and reasonable expenses necessary to produce such income.
You’ve got your revenue that comes in from your business, from your contract work, and then you get to deduct certain relevant, necessary business expenses. And that’s where you determine a level of income for self-employment.
That’s not the end of it, because from there you get to make adjustments for taxes that are paid. If you are employed, you’ve got your employment taxes, and half of that comes out of your check, half of it’s paid by the employer.
If you’re self-employed, you actually pay both sides of that. You pay the side for the person that’s receiving the income, as well as the employer side, so you pay twice the amount.
In order to level that out for comparing a self-employed person to someone who’s employed by another business, then you get to take out of your revenue, after expenses, the amount that is attributable to the employer for your side of payroll taxes. Your FICA taxes that come out for the employer, you get to reduce your income with that amount.
The other thing that the statute notes are that it’s not the same as determining what your income is for tax purposes or IRS purposes. What is allowed to be deductible for tax purposes is different than what may be deductible for reasonable necessary business expenses.
For instance, depreciation, things like that may be handled differently, and it doesn’t provide exact rules, but I’ll say what it provides related to that. It says a determination of business income for tax purposes should not control for the purposes of determining a child support obligation amounts allowed by the internal revenue service for accelerated depreciation and investment tax credits shall not be considered reasonable expenses. That’s an important determination there.
That’s the general information about how you determine your income if you are self-employed for child support purposes in Oklahoma. If you’ve got specific questions, you’re going to want to talk to an attorney about that privately and confidentially. To get that scheduled with somebody at my office, you go online to makelaweasy.com.
