Thursday, September 19, 2013
Income and Child Support
I don't usually talk about substantive issues on this blog. Today, I make one of my exceptions. Let's talk income. Not income for tax purposes. Not income as in money you can spend. I want to talk about income for child support purposes. You see, what we consider income here in the Trenches isn't necessarily what clients consider income. Hence, a short primer on income in the Trenches. Income here in the Trenches is any money, services, or gifts received on a regular basis, or as a result of employment, which reduces the living expenses of the recipient. That means if your business pays for your cell phone which you use for both personal and business purposes, your health insurance, your car expenses, or for your uniform, those amounts are considered income to you here in the Trenches. If your parents give you money to live on every year, if you live with Mom and Dad for free, or if Mom and Dad let you live in a house they own and don't charge you for it, that can be considered income here in the Trenches.
If you have your own business, there are a lot of legitimate IRS deductions that the court can and will add back into your income. Yes, I know depreciation is a legitimate expense, but it's only one on paper; we consider it income here in the Trenches. If you have a home based business, unless it's a landscaping business, the IRS understands you need to make the grounds of your office look good to impress clients, but here in the Trenches, it's probably income. Same thing for nice dishes to serve clients coffee and snacks, if you also use them to eat dinner. Meals out? Are they staff meals for your office of one, or are they for entertaining clients? It makes a difference here in the Trenches whether we consider them income or a true business expense. Remember, if it decreases your need to pay for your living expenses personally or it is only an expense on paper, we here in the Trenches don't care what the IRS says. It's income. But wait, there's more. Did you loan your business money? Is it a true loan or an infusion of equity? We know there are legitimate reasons for both. One, however, is a liability of the company and may have an effect on income; the other has little to no effect on income. The difficulty is that legitimate business purposes and Trenches income sometimes work at cross purposes. It's enough to give you heartburn. Here in the Trenches.
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