Family Court Playbook · Step 7 of 12
S-Corp Income & Imputed Income in California Child Support
How courts calculate support when a parent is self-employed, runs an S-Corp, or is voluntarily unemployed
Income for support is more than a W-2
California Family Code § 4058 defines income broadly. It includes wages, salary, commissions, bonuses, dividends, rental income, Social Security, pensions, trust income, and income from a business. The court looks at what you actually earn AND what you could earn — the law is designed to prevent a parent from artificially reducing their reported income to lower a support obligation.
Self-employment income
For a self-employed parent, the court calculates income as gross receipts minus legitimate business expenses. The court scrutinizes business deductions more aggressively than the IRS does. A deduction that is legally valid for taxes may still be added back for support purposes if the court considers it a personal benefit — a company car used personally, a home office deduction for a room not exclusively used for business, or meals and entertainment that primarily benefit the owner.
Family Code § 4058(a)
Follow the money
W-2 salary vs. S-Corp distributions
Income for Support
S-Corp distributions and retained earnings
An S-Corp owner can pay themselves a modest salary and leave profits in the business. The court can look past the W-2 to the K-1 (Schedule K-1 of Form 1120-S) to find the true income flowing through the entity. Retained earnings that serve no legitimate business purpose can be treated as available income for support. The judge will ask: does this person need to retain this money in the business, or are they parking it there to avoid paying support?
Imputed income
Under Family Code § 4058(b), the court can assign income a parent could be earning even if they are not currently earning it. This applies when a parent is voluntarily unemployed or underemployed. The court considers education, work history, the local job market, available opportunities, age, health, and the standard of living during the marriage or relationship.
When courts impute income
Common scenarios where a court will assign income the parent is not currently earning: a parent quits or reduces hours shortly before or during litigation; a parent has a degree or marketable skills but chooses not to use them; a parent takes a lower-paying job without a good reason; or a parent's lifestyle is obviously inconsistent with their claimed income — expensive vacations, a new car, or home renovations on a $40,000 salary.
Document everything
How to prove real income
Subpoena bank records (personal AND business accounts), request tax returns for the last three years including all schedules, demand K-1 forms for any business entity, request profit and loss statements, hire a forensic accountant for complex cases, and conduct a lifestyle analysis comparing spending to claimed income. The court can order the other party to produce any of these records in discovery.
What to do if your ex hides income
File a Request for Order (FL-300) requesting discovery, attaching your discovery requests as exhibits. Ask the court to impute income based on the evidence you do have. Request that the court order the other party to produce business records. In cases of deliberate concealment, you can request sanctions under Family Code § 271 for failure to disclose, which can shift attorney fees and costs to the non-disclosing party.
Calculate yours with real income numbers
Use our child support calculator to estimate support based on actual income — not just what they claim on a W-2.
Open the free calculatorA family law attorney will always have the biggest impact on your case. If you can afford one, we encourage you to hire one.