The gig economy in Florida and throughout the country has created more flexibility for individuals to earn money on their own terms. The independence and flexibility of this type of economy allows many to manipulate the tax system to their advantage. Many are using the system to avoid having to pay child support.
When large amounts of income go underreported, a person responsible for paying child support can avoid having to pay the correct amount of child support entitled to the custodial parent. This is because the child support formula only factors in the reported amount of money earned by the other party. Not having all of the income reported makes it easier to pay less in child support on a monthly basis, which may cause undue hardship on the custodial parent.
In cases where paternity or out-of-state divorces may be central to the matter, underreporting earnings is prevalent. Any time a verbal agreement is used for collecting child support, voluntary impoverishment can be an issue. When used for the purpose of avoiding high child support payments, the person is practicing what is called voluntary impoverishment. The term implies that one is manipulating the system to pay less in child support.
One sign that may indicate whether a parent is practicing underreporting is a recent large purchase. The financial data used to get a loan may provide insight into a person’s actual earnings. Working odd gigs and under-the-table jobs may be another indication that voluntary impoverishment may be a tool used to pay less in child support.
A family law attorney may provide legal counsel for those who feel they have been shortchanged in the area of child support. An attorney might investigate the other parent’s finances to determine the person’s actual earnings for a more equitable child support arrangement. They may also formalize the agreement so that the custodial parent has access to government assistance when collecting child support.