How Florida Courts Handle Hidden Business Income in Child Support Cases
Child support is determined based on a formula that considers the income levels of each parent and the amount of time spent with the child. However, this is not always easy, especially when one parent is suspected of hiding assets or income. This becomes especially true if they own a business. However, in such situations, the court has ways to address this and make a fair determination for child support.
How is child support normally calculated?
In Florida, the state follows a statutory child support guideline schedule, which heavily relies on the gross income of the parents. Gross income can include wages, bonuses, commissions, rental income, investment income, and income from businesses. If the parent receives a paycheck from a company, it is relatively easy to figure out the income level.
The situation can become more complex, especially in cases where the parent owns a business or is self-employed. The parent who owns a business has more control over the income level and can earn income in the form of distributions, earnings, or payments from the business, which might not be readily apparent.
Allegations of hidden or unreported income
In some child support cases, one party can accuse the other of intentionally reporting less income to decrease their child support burden. For example, a business owner can say that they are not making money from their business, yet they live comfortably. Some can even use their own money for personal expenses through their business accounts or draw less income to show less on paper.
In such situations, the court can allow further investigation into the parent’s financial situation. This can happen during the discovery process.
The role of financial records and experts
To check if income is being concealed, the court can also examine tax returns, bank statements, profit and loss statements, and other relevant business documents. In some cases, a forensic accountant can be called in to examine the business finances.
A forensic accountant can also check for discrepancies in financial statements, cash flow, and can even calculate the income of a parent based on the business finances. They can also check if personal expenses are being claimed as business expenses.
If the court finds that a parent has intentionally misrepresented their income, the judge has the power to adjust the child support amount.
Imputing income in child support cases
When the court suspects that a parent is intentionally reporting less income than they really have, it can impute income to the parent. In this context, impute refers to the act of assigning an income level to a parent according to existing information rather than the information provided by the parent.
The imputed income of such parents can be drawn from their history of employment, educational background, and their business’s financial success. Ultimately, this is a powerful tool that the court employs to ensure the child’s needs are being met and both parties are acting fairly.
Talk to a Tampa, FL, Divorce Lawyer Today
Westchase Law, P.A., represents the interests of Tampa residents during child custody and support hearings. Call our Tampa family lawyers today to schedule an appointment, and we can begin preparing your case right away.
