Q:

Subject: Laws

Can I hide child support through a corporation regardless of  a S or C. Can the state of PA look at my records for child support? How about if I have someone else as my Director? Can they track this? Thank you K

A:

I'm assuming that you are referring to hiding your income from child support requirements.  Those laws are state specific; so you will need to consult with a PA attorney who is familiar with your state's requirements for disclosure of income related to child support.

I do know that it is a common technique to use corporations to hide income and appear more impoverished.  Back in California, one of the CPAs who I used for tax prep assistance during tax seasons had me pay his corporation for that very reason.

If the court only requires you to present a copy of your 1040 each year for the determination of the child support amount, it does make a big difference whether you have an S or C corp.  As with the real life case from here in Arkansas that I described on my website, a profitable S corp's earnings will show up on your 1040, inflating the gross income, even when the actual cash you may have received was much less, or even nothing.

As I always warn everyone, the establishment and use of a corporation of any kind is not the kind of thing you should be doing without the aid of a competent professional tax advisor.

Good luck.

Kerry Kerstetter

 

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 7/04/2005 01:57:00 PM Send this post: