Determining fair support terms is rarely simple, but it becomes even more complicated when one spouse is self-employed or freelancing. As a spousal support lawyer can share, income for self-employed individuals often fluctuates or lacks clear documentation, which makes it harder to assess true earning potential during divorce proceedings.
Irregular Income Raises Unique Questions
When a person earns a salary, there is a consistent income trail. That consistency does not exist for freelancers or small business owners. Judges and attorneys must examine tax records, client contracts, business expenses, and historical earnings to calculate what kind of support is appropriate. In some cases, courts may average income over several years or impute income based on lifestyle or available work opportunities.
This process can be contentious if the numbers vary widely from year to year. For example, a freelance graphic designer may earn $120,000 one year and only $60,000 the next. Courts will need to understand the context behind these fluctuations and whether they reflect natural cycles in the industry or shifts in work ethic and availability.
Hidden Or Unreported Income Can Be An Issue
Another complication involves transparency. Freelancers may have side arrangements, barter income, or inconsistent cash flow. If a party suspects their former spouse is underreporting income, they may request discovery or hire a forensic accountant. Proving actual income becomes critical to avoid unfair support obligations.
Even the structure of payment can create challenges. Many self-employed individuals receive lump-sum payments at irregular intervals. If those are not clearly tracked or deposited in personal accounts, they may not show up in standard financial reviews. Legal intervention helps ensure that income is fully and fairly presented.
Temporary Dips In Earnings May Mislead
Freelancers sometimes experience lean periods due to market shifts, project gaps, or health issues. Courts recognize this, but also must weigh whether the dip is temporary or indicative of long-term earning ability. A federal attorney might be consulted if income reporting crosses into regulatory or tax compliance issues.
A judge will oftentimes also consider someone’s earning history and capacity. For example, if someone has a history of higher income as a freelancer, a temporary decline over a few months might not affect support figures in any meaningful way.
Business Expenses Are Scrutinized Closely
Many freelancers write off expenses as part of their tax strategy, but not all of these deductions will reduce income for support purposes. Personal expenses disguised as business costs may be added back in. Attorneys and courts often request detailed financials to sort legitimate business costs from lifestyle expenses.
This is especially true for categories like travel, meals, or home office use. If a freelancer claims large deductions in these areas, the court may want to see receipts and justification. Inflated deductions can make it appear that income is lower than it actually is.
Because support cases involving self-employment often involve complicated finances, legal representation becomes especially important. As our friends at Merel Family Law can share, getting accurate income assessments and anticipating legal scrutiny are essential steps in preparing for a fair outcome. If you or a loved one is in a similar situation, reach out to a local lawyer today to discuss your options.