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Self-Employment Income & Child Support: Massachusetts vs. the National View

We are pleased to link to an Article published by a colleague of ours, Jason V. Owens, Esq. of Stevenson & Lynch, P.C., in the June 2011 edition of the Suffolk Journal of Trial & Appellate Advocacy entitled Determining Self-Employment Income for Child Support Purposes: the Massachusetts View Compared with the National View. The article focuses on the thorny problem of calculating “income” for child support purposes in cases involving self-employed parents who operate a business over which the parent exerts financial control.

Much of the article explores the differences and similarities between “business income”, as defined by federal tax law, and “self-employment income”, as defined by child support guidelines in Massachusetts and other states. Much of the impetus behind this “compare and contrast” approach is practical. Determining a business owner’s “income” for child support purposes almost always begins with an examination of the business’s state and federal tax returns. The challenge for attorneys, parties, and judges often lies in determining which sections of the business’s tax returns can be applied to the child support analysis – and which sections must be carefully scrutinized or rejected altogether when analyzing the return from the child support perspective.

How does “business income” on a tax return differ from “self-employment income” on a financial statement filed in a child support case? Which tax deductible business expenses are most likely to be abused and manipulated by a self-employed parent? When can a business expense be legitimately deductible under the tax code but countable as “income” under child support law? The Article explores the legal underpinnings of these and related questions, identifies and pinpoints the prevailing law and national trends, and acknowledges the ambiguities and approaches taken among the states.

Reprinted with permission from Stevenson & Lynch, P.C.

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