Evidence of Income for Child Support

Evidence of the parent's income is required before the family court can issue a child support award. In most cases, the parent’s tax return is the best evidence of their income. The parent’s gross income on tax returns is stated under penalty of perjury and enjoys a presumption that it is a correct statement of income. Aside from this, the court may also consider the parent's income and expense declarations and pay studs, as well as the testimony of experts and the parents themselves.

Lifestyle Evidence

The child support award should not be based only on the so-called “lifestyle evidence” of the parent’s income. Evidence such as a parent having a new car or living in a new home is not sufficient as the sole basis for the child support award.

Challenging The Tax Return Income of A Business Owner

Some business owners may try to maximize their business deductions to reduce their taxable income and thus reduce their liability for child support.  However, in the case of a parent who owns a business, the other party can rebut the presumption that the business owner’s income on their tax return is correct.  To rebut the presumption, the other party can use the parent’s income reported on loan applications to evidence greater income than reported on tax returns.  For example, a father who owns a small business may have reported higher income on his loan application than gross income reported on tax returns. In this case, the court may allow the rebuttal of the presumption regarding tax return income.

Earning Capacity vs. Actual Income

The court has the discretion to use the parent’s earning capacity as a basis for calculating child support instead of their actual income, so long as it is consistent with the best interests of the supported children. You can also reach out to your family law attorney Sacramento. There has been expansive use of earning capacity as a basis for calculating child support due to the public policy of providing adequate child support. Courts have the discretion to impute income to both the payor and the payee parent-based on their earning capacity. When the court considers earning capacity instead of actual income, it is only the actual earned income that is replaced by earning capacity. The court may consider both earning capacity and actual unearned income and add the two items when calculating child support.

When Can Earning Capacity Be Used?

It is not necessary for bad faith to exist before the court considers earning capacity. The court should consider the “earning capacity” of an unemployed or underemployed parent when it is shown that the parent has:

·         The ability to work, considering factors such as the parent’s age, occupation, skills, education, health, background, work experience, and qualifications; and

·         An opportunity to work. The parent has an opportunity to work if there is a reasonable likelihood that the party could, with reasonable effort, apply his or her education, skills, and training to produce income. “Opportunity” is limited to working for someone else. The court may also consider the parent’s “opportunity” for self-employment.

If any of these two factors are absent the court may not impute earning capacity. But if the parent is unwilling to work, despite having the ability and opportunity to do so, earning capacity can be imputed.