Calculating Child Support in Texas: Insights from Rudd Legal

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At Rudd Legal, we understand that child support is a critical aspect of ensuring the well-being of your child after a divorce or separation. Calculating child support can be complex, particularly when a parent is self-employed or has varying income sources. We're here to provide you with essential information on how child support is determined in Texas, what income is considered, and how to address unique situations involving self-employed parents.

Calculating Child Support in Texas:

Child support in Texas is primarily calculated based on the paying party’s gross income, which aims to ensure that all sources of income are considered when applying the guideline percentages.

Income Considered for Child Support:

When calculating child support, various types of income are considered, including:

1. Wages and Salary: This includes income from employment, bonuses, commissions, and overtime pay.
2. Self-Employment Income: If a parent is self-employed, their net income from their business or profession is considered.
3. Rental Income: Income generated from rental properties or real estate holdings.
4. Investment Income: This includes income from dividends, interest, and capital gains.
5. Retirement Benefits: Payments from retirement plans, pensions, and Social Security benefits.
6. Other Sources: Any other sources of income, such as disability benefits, unemployment benefits, and worker's compensation.

Income Deductions:

Certain allowable deductions are subtracted from the parent's gross income to arrive at their net income, which is then used to calculate child support. Deductions may include:

1. Taxes: Federal income tax, state income tax, and Social Security taxes, as provided by the Texas Family Code.
2. Union Dues and Retirement Contributions: Mandatory deductions for union dues or nondiscretionary retirement plan contributions.
3. Child Support for Other Children: If a parent is already paying child support for other children that do not share parents, the percentage used to calculate the child support will be lowered. For instance, if a parent has one child in the current suit and another child from a previous marriage, the court will 17.5% to calculate the support instead of the standard 20%.

Self-Employed Parents and Child Support:

When a parent is self-employed, calculating their income for child support purposes can be more complex. Self-employed individuals often have fluctuating income and business expenses that must be carefully considered. To calculate child support for a self-employed parent:

1. Determine Net Income: Calculate the self-employed parent's net income by subtracting legitimate business expenses from their gross income.
2. Review Business Records: Carefully review the self-employed parent's financial records, including tax returns, profit and loss statements, and business expenses, to accurately assess their income.
3. Account for Irregular Income: If the self-employed parent has irregular income, an average income over a specified period may be used to determine child support.
4. Impute Income: In some cases, income may be imputed if a self-employed parent is intentionally underreporting their earnings.