How Illinois calculates support for a self-employed parent
Illinois uses an income-shares model. The calculation starts with both parents' monthly net incomes, combines them, selects the applicable basic support amount and allocates the parents' shares. Business ownership does not replace that framework. See 750 ILCS 5/505(a)(1.5).
Three different figures need to stay separate:
| Figure | What it describes | Why it matters |
|---|---|---|
| Business receipts | Money generated by the business before its expenses | A starting point for the business review, not the parent's final support income |
| Net business income | Receipts less expenses the support statute permits | The business component must be established before completing the personal income calculation |
| Parent's monthly net income | Income after the statute's tax treatment and applicable adjustments | The figure used in the income-shares calculation |
The governing provisions are section 505(a)(3)(A)-(F) and (a)(3.1). A bookkeeping label does not finish the analysis. For example, a transfer called an owner draw needs to be traced to its source and reconciled with income already counted.
The Illinois Department of Healthcare and Family Services publishes the official income-shares schedules, conversion tables and worksheets. HFS identifies March 20, 2026 as the effective date of its latest table and schedule updates. Older cases discussed below remain useful for their income analysis, but Illinois replaced its former percentage-of-income guideline model in July 2017. An old opinion's support percentage should not be used as today's formula.
The official statute also displays amendments taking effect January 1, 2027. This article uses the version in force on its stated date. Our 2026 and 2027 Illinois child support guide explains that transition, and our section 505 guide covers the broader calculation.
Which business expenses reduce income for child support?
Section 505(a)(3.1) uses receipts less ordinary and necessary business expenses. It covers sole proprietorships, closely held corporations, partnerships, other flow-through entities and self-employment. It specifically excludes the accelerated component of depreciation and expenses found inappropriate or excessive from allowable deductions. See 750 ILCS 5/505(a)(3.1)(A).
This requires a review of what an expense actually paid for. A line called travel, repairs, consulting or vehicle costs is the beginning of the inquiry. Useful questions include:
- What goods or services did the business receive?
- Is there an invoice, receipt, agreement or other supporting record?
- Does the payment include personal use that should be separated?
- Is the same cost listed in more than one account or schedule?
- Did a large one-time purchase change this year's reported profit?
These are practical preparation questions, not a promise that every documented expense will be allowed. Documentation shows what happened; the statutory standard determines its treatment.
Depreciation and personal expenses need separate attention
The statute targets the accelerated component of depreciation. It does not say that every dollar of depreciation must automatically be added back. A useful analysis identifies the asset, acquisition date, depreciation method and amount claimed, then explains the proposed support adjustment. Bring the depreciation schedule, not just the total shown on the tax return. See section 505(a)(3.1)(A).
Business benefits can also affect income. A significant reimbursement or in-kind benefit that reduces personal expenses must be counted if it is not already included in gross income. The statute gives examples such as a company car, meals and housing. See section 505(a)(3.1)(B).
For a mixed-use vehicle, gather mileage records and payment records. For a company-paid phone, identify the business and personal uses. The goal is an explainable allocation that avoids counting the same economic benefit twice.
What Illinois cases say about business income
Moorthy: retained corporate earnings require a factual review
In In re Marriage of Moorthy, 2015 IL App (1st) 132077, the appellate court rejected an automatic rule requiring a majority owner's proportionate share of retained S corporation earnings to be included. It called for a case-specific analysis, including ownership, control over distributions, the history of distributions and retention, excessive accumulation and possible income manipulation. Legitimate capitalization needs matter. The court affirmed the exclusion on the record before it. See Moorthy, paragraphs 64-66.
For a business owner, the preparation lesson is to explain why funds stayed in the company. For the other parent, the question is whether the explanation matches the records. Helpful material may include operating agreements, distribution restrictions, cash forecasts, payroll obligations, planned equipment purchases and historical balances. Corporate ownership alone does not settle what funds were available to that parent.
Moorthy predates the income-shares model. Its discussion of retained earnings should be read with the current business-income statute, not its historical support formula.
Vance: inconsistent records can undermine the claimed income
In Vance v. Joyner, 2019 IL App (4th) 190136, a cash-business owner's affidavits, expense calculations and tax returns did not reliably reconcile. The appellate court upheld the trial court's determination of his income. It also recognized flaws in the other parent's deposit-based calculation, including its treatment of transfers and expenses. See Vance, paragraphs 70-76.
The practical lesson cuts both ways: incomplete records can weaken an owner's explanation, and adding every deposit together can overstate income. Prepare a reconciliation that identifies each account, removes duplicate transfers and explains the actual business receipts and expenses.
McGrath: withdrawing existing savings is not itself new income
In In re Marriage of McGrath, 2012 IL 112792, the Illinois Supreme Court held that withdrawals from a savings account did not become income merely because the parent used the money for living expenses. Those funds were already owned. The court separately recognized that assets could matter when considering a departure from the guidelines. See McGrath, paragraphs 14-18.
This is not a blanket exemption for owner draws, distributions, investment earnings or retirement withdrawals. The decision expressly left IRA withdrawals outside the question presented. See McGrath, paragraph 10, footnote 2. Its lesson for business cases is to trace the source of a transaction before labeling it income. A bank withdrawal alone does not establish whether the money is current earnings, previously accumulated savings or something else.
What records should a self-employed parent gather?
Start with the official Illinois Financial Affidavit forms, which include additional employment/business and business-interest schedules. Our financial affidavit guide explains how to organize the information.
The following is a preparation checklist. The necessary period and scope depend on the issues, applicable rules and court orders; this is not a universal production demand.
| Records | Questions they help answer |
|---|---|
| Personal and business tax returns, with schedules, K-1s, W-2s and 1099s | What was reported, and which entities or income sources need review? |
| Monthly profit-and-loss statements, balance sheets and general ledgers | How were revenue, expenses, assets and liabilities recorded? |
| Business and personal bank and credit-card statements | Where did funds go, and which entries are transfers rather than new receipts? |
| Cash logs, invoices, receipts, payment-processor reports and deposit records | Are cash and electronic sales fully accounted for? |
| Payroll, owner draws and distribution records | What reached the owner, and has it already been counted elsewhere? |
| Depreciation schedules and asset purchase documents | Which deductions reflect accelerated depreciation or significant purchases? |
| Ownership agreements, loan documents and distribution restrictions | Who controls distributions, and what obligations affect business cash needs? |
| Current contracts, cancellations, receivables and year-to-date results | Does the latest tax year fairly describe present operations? |
A spreadsheet is most useful when each disputed number points to a source document. Keep a separate explanation for estimates, missing records and corrections. Mixing a personal mortgage with business expenses, or changing an affidavit without an explanation, can make an otherwise legitimate position harder to evaluate.
How can the other parent obtain business records?
In a court case, relevant documents and electronic records may be sought through discovery. Illinois Supreme Court Rule 214(a)-(b) governs document requests and electronic production. Rule 201(a)-(c) addresses discovery methods, relevance, privilege, proportionality and protective orders.
A focused request should identify the period, accounts and transactions actually in dispute. Business confidentiality concerns can be addressed through the proper process; they do not make every request automatically improper. Ask counsel how to preserve records and handle sensitive documents. Do not assume that exchanging financial documents means every document belongs in the public court file. Rule 201(m) separately restricts filing discovery materials.
Can the court use earning capacity instead of reported income?
If a parent is voluntarily unemployed or underemployed, section 505(a)(3.2a) requires a determination of potential income. The analysis considers the parent's actual circumstances, including work history, skills, education, health, employment barriers, job-search efforts and available work. See 750 ILCS 5/505(a)(3.2a).
Section 505(a)(3.2b) also requires an evidentiary hearing or the parties' agreement before income is imputed, together with specific written findings identifying the basis for imputation using the statutory factors. See 750 ILCS 5/505(a)(3.2b).
A disappointing business month does not, by itself, answer whether a parent is voluntarily underemployed. Useful evidence might explain lost customers, market conditions, disability, efforts to replace work and realistic employment alternatives. Conversely, the fact that a parent sets their own salary does not make that salary the end of the inquiry.
Keep this issue distinct from incomplete records. Under section 505(a)(5), when net income cannot be determined because of default or another reason, the court orders a reasonable amount for the particular case. Vance illustrates that problem. Identifying which issue is disputed helps determine what evidence is missing.
Two hypothetical examples
Example 1: a contractor with mixed expenses
A hypothetical contractor reports business receipts and several expense categories. The vehicle account combines work travel and family trips, while an equipment deduction includes accelerated depreciation. The first task is to separate and document those items. The resulting business-income figure still must be combined with other applicable income and processed through the statutory net-income calculation. It is not the child support payment itself.
For the contractor, useful preparation means bringing mileage records and the depreciation schedule. For the other parent, it means identifying a specific proposed adjustment and its supporting evidence. Neither side can obtain a reliable answer from the return's bottom line alone.
Example 2: an owner who leaves money in the company
A hypothetical owner pays a modest salary while the company keeps substantial earnings. One explanation is a documented need to fund payroll and upcoming contract expenses. Another possible explanation is an unusual decision to stop distributions during support litigation. Ownership documents, historical distribution patterns and cash forecasts help test those competing explanations under the Moorthy approach.
These examples illustrate questions to investigate. They are not client results or predictions about a judge's decision.
What if business income changes after a support order?
A support order should be reviewed through the applicable modification process. A substantial change in circumstances is a principal ground under 750 ILCS 5/510(a)(1). A fixed support obligation does not automatically change merely because business receipts decline or increase; any adjustment provisions already in the order also need to be reviewed.
Section 510(a) generally limits modification to installments accruing after due notice of the filing of the modification motion. A private discussion or a new financial statement is not a substitute for that procedural step. Preserve current records and obtain advice promptly rather than assuming a later order will erase earlier installments. See our Illinois child support modification guide.
HFS also has a support review and modification process. Its procedures should not be confused with filing a motion in an existing court case. HFS explains that its child support services attorney does not represent either parent. The agency's services and a privately retained attorney's representation are different roles. If the existing order is unpaid, our child support enforcement guide explains the separate enforcement issue.
Common questions about self-employment and child support
Is a three-year income average always required?
No. Vance recognized that averaging can be reasonable for fluctuating income, but it is not the only permissible method and requires reliable figures. See Vance, paragraph 75. Bring current results alongside historical records and explain why the proposed period fairly reflects the business.
Does an S corporation or LLC automatically protect earnings from support?
No automatic answer follows from the entity's label. The current statute expressly covers several business forms, and Moorthy calls for factual review of retained corporate earnings. Identify ownership, control, business needs and the source of funds before proposing inclusion or exclusion.
Should I simply report every bank deposit as income?
A deposit summary is a useful starting tool, but it needs reconciliation. Transfers, existing savings and business receipts must be distinguished. The Vance and McGrath decisions explain why source tracing matters. Keep supporting records for each adjustment instead of relying on a label such as draw or transfer.
Free consultation about self-employed child support
If you are seeking to hire an attorney for a Chicago or Cook County child support matter, Chicago Family Attorneys offers a free initial consultation to learn more about your situation. We can discuss the disputed income issues, available records and possible next steps. Any representation, scope of work and fees are confirmed separately.
Bring your existing support order, recent financial affidavit, available personal and business tax returns, current business financial statements and a short list of disputed transactions or expenses. If you do not yet have every record, identify what is available and what is missing.
Request your free consultation, call 312-965-5618, or learn more about our Chicago child support lawyers.