Under Minnesota law, for child support purposes, self-employment income is defined as: “gross receipts minus costs of goods sold minus ordinary and necessary expenses required for self-employment of business operation.” Minn. Stat. § 518A.30.
Further, expense reimbursements and payments received from employment or self-employment also qualify as income if they reduce personal living expenses. Minn. Stat. § 518A.29(c).
Important financial documents to review when a parent receives income from self-employment includes, but is not limited to, the following:
- Any loan or mortgage applications (in order to compare the income disclosed);
- Bank statements (in order to review deposits made to a checking or savings account);
- Bank account statements and credit card statements (to verify living expenses).
Of course, it remains important to review the last few years of tax returns as well. If you are self-employed and are not able to explain your tax returns in detail, you should consider speaking with your regular accountant about the possibility of him/her providing an Affidavit or testifying in Court.
If the Court does not have sufficient evidence to determine self-employment income, or if the facts make it difficult to determine self-employment income, the Court may choose to estimate income for child support purposes.