Is Child Support a Reasonable Business Expense Deduction From The Child Support Calculation of Income?

Determination of Reasonable Business Expenses 

In Virginia, decisions awarding child support are based upon a standard of an abuse of discretion and will not be reversed on appeal until the award is plainly wrong or unsupported by the evidence. 

Example of Fekete v. Fekete (2021) 

In Fekete v. Fekete, 21 Vap UNP 1012204 (2021) the trial court heard all of the evidence involving the father of two children. Child support was originally established by court order for two children. The father was self-employed at a company that installs both audio and video equipment. 

The father admitted to regularly commingling personal and business funds as well as methods of payment. In the evidence provided, the father claimed that his gross income was $128,900, and that he had incurred approximately $80,000 of business expenses and living off of less than $48,000 a year. 

Do Disney World Vacations included as “Business Expenses” count? 

Interestingly enough, the evidence was presented that the father traveled internationally at least once a year, as well as taking his children on vacation to Disney World, making monthly contributions to two different charities, owning multiple properties, and receiving personal loans that “may or may not have required payment.” With this, the trial court found that the father earned $120,000 per year and ordered guideline child support. 

Court’s Discussion 

The circuit court explicitly explained its reasoning and review of the evidence, saying: 

“The father's income is very interesting. I did look through all the bank accounts . . . and I looked at the tax documents as well. He mixes his money together with business and his personal gains. He gets income in many different ways to include all his businesses, or to include loans that he doesn't expect to repay—or he doesn't have any guidelines to repay—GoFundMe to use for vacations, which is still income then. He has lease income. He has regular income, other business income. He has Venmo income. Based on that, I am going to impute $120,000 a year to father.” Fekete v. Fekete, Record No. 1012-20-4, 7 (Va. Ct. App. Apr. 13, 2021) 

Standard of Review 

Code § 20-107.2 vests authority in the circuit courts to determine the appropriate amount of child support owed by each parent upon divorce. See Code § 20-107.2 ("Upon entry of a decree providing . . . for a divorce . . . the court may make such further decree as it shall deem expedient concerning the . . . support of the minor children of the parties . . . ."). This Court reviews circuit court decisions awarding child support for an abuse of discretion and will not reverse on appeal unless the award is plainly wrong or unsupported by the evidence. See Young v. Young, 3 Va. App. 80, 81 (1986). There is a rebuttable presumption that if the circuit court followed the guidelines set forth in Code § 20-108.2(B) in determining a child support award, the award is correct. See Code § 20-108.2(A)-(B). 

After a child support amount is determined, the circuit court has jurisdiction to revise and alter it. See Code § 20-108; see also Mayhood v. Mayhood, 4 Va. App. 365, 369 (1987). "However, the court may alter its prior decree only if a material change in condition and circumstances has occurred, and the burden of proof is on the party moving for an increase or decrease in the support amount." Mayhood, 4 Va. App. at 369. On appeal, we review the evidence in the light most favorable to the prevailing party in the circuit court. See Hughes v. Gentry, 18 Va. App. 318, 321-22 (1994). 

Fekete v. Fekete, Record No. 1012-20-4, 5 (Va. Ct. App. Apr. 13, 2021). 

Conclusion 

The trial court heard all of the evidence and did not give much weight to the testimony regarding his business expenses. Given that any determination of the father’s income and business expenses rests largely on the credibility that the trial court as the fact-finder assigned to the father’s testimony and the weight it chose to give it, the trial court was correct in reaching the factual conclusions about the father’s gross income and reasonable business expenses. 

Note on Child Care Expenses 

“Code § 20-108.2(G)(3)(b), part of the statutory guidelines for determining child support, states that shared child support may include work-related child care costs.” Fekete v. Fekete, Record No. 1012-20-4, 7 (Va. Ct. App. Apr. 13, 2021) 

At the hearing, evidence was presented that tended to show the mother was continuing to incur work-related child care expenses. Mother testified under oath that she used a babysitter during her weeks with the children and introduced a written contract, signed by Budd, that promised bi-weekly child care at a rate of $400 a week. Because the circuit court was the finder of fact and there is evidence in the record to support its determination regarding mother's work-related child care costs, we cannot say that it erred. 

Fekete v. Fekete, Record No. 1012-20-4, 8-9 (Va. Ct. App. Apr. 13, 2021) 

Special Thanks to Law Clerk William Taylor Gleason for his assistance with this article.