How Does Self Employment Affect Child Support
As previously discussed, when calculating child support in Oklahoma an individual is imputed at their gross income with only specifically set out items that are excluded. As a reminder Oklahoma has determined gross income to be any “earned income” with ‘earned income” defined as income received from labor or the sale of goods or services and includes.
This definition becomes less clear in the context when an individual is self employed and relies on the income generated from a marital or non marital business, especially when the business has its own monthly expenses.
The child support guidelines tack into consideration the costs of self-employment in several ways. When imputing an individual’s income. The total gross income will be calculated, but then any self employment income will receive a deduction for self-employment tax of 7.65%. Likewise, the law provides that income from self-employment includes income from, but not limited to, business operations, work as an independent contractor or consultant, sales of goods or services, and rental properties, less ordinary and reasonable expenses necessary to produce such income.
When it comes to rental properties any income generated from said properties is reduced by the ordinary and reasonable expenses associated with maintaining and owning those properties, this includes the total cost of any mortgage or loan interest paid; as well as, monthly repair costs or even utility bills which the may have to be paid.
Another factor to consider in self employment and contract work is if an individual is receiving fringe benefits. Fringe benefits for inclusion as income or in-kind remuneration received by a individual in the course of employment, or operation of a trade or business, will be counted as income if they significantly reduce personal living expenses.
Such benefits might include, but are not limited to, company car, housing, or room and board, with basic allowance for housing being considered income for the purposes of determining child support. However, for the purposes child support and an individual’s income, fringe benefits do not include employee benefits that are typically added to the salary, wage, or other compensation that an individual may receive as a standard added benefit, such as employer contributions to portions of health insurance premiums or employer contributions to a retirement or pension plan.