How do I add income from a small business to the California Income and Expense Declaration, form FL-150?
Question: If my spouse is self-employed with his own business, how should his income be stated in form FL-150 Income and Expense Declaration? On line (1.a) must he must state the name of his business, and on line (1.h) he must state his business’s gross income (before any taxes)? On line (7) must he must state his income after his business expenses are deducted, in other words his net profit (before any taxes)? Also, in my FL-150 on line (4) do I state the same income as set out on his FL-150 line (1.h)?
Answer: If your spouse is self employed and does NOT receive W-2 wages from their business they don’t have to fill in section 1 as long as they fill in 7. (They can fill in 1 if desired).
Note that self employed parties must include a Profit and Loss for the last two years or Schedule C. It’s important to fill out both columns in either (or both) sections 5 and/or section 7. Courts are interested in the 12 month average–the second column.
Yes, the income reported on a FL-150 is before taxes for both W-2 and business owners’ self-employment income.
Also remember that your ex ‘s business income may be less for tax purposes than it is for calculation of child support. Takeaway for people involved in a California divorce in which the spouse owns a small business: If your spouse claims a significant income decrease due to business expense deductions when determining child support, the burden of proof is on the owner spouse to prove the court should accept the deductions. The owner spouse’s tax return is not dispositive.
For more information on how income available for support is calculated for small business owners read this article.
Finally, you put in his average monthly income from section 7 column 2 in your FL-150 at line 4.
Question: What is the FL-150 Income and expense declaration?
Answer: This form is used to provide financial information to the court and to your spouse or domestic partner regarding your income and expenses. The court uses the information to make orders for support, attorneys fees, and other costs. It is necessary to prepare the FL-150 in every California divorce case and in each Paternity Action in which child support is sought. Here is a link to the form to see it for yourself.
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