Running a business in the San Antonio area requires a specific type of grit. Whether you are managing an S-Corp or LLC near Hill Country Village or working as a 1099 independent contractor throughout Bexar County and South Texas, you are used to handling complex finances. But when a marriage ends, or a child support case begins, those financial complexities can lead to significant stress.

We often see business owners walk into our office concerned that their child support payments will be based on their gross revenue rather than their actual take-home pay. Other times, parents are worried that a former spouse is hiding income behind a corporate veil.

A Texas business owner’s guide to calculating child support (for 1099s, LLCs & S-Corps) requires careful review of the Texas Family Code. The law treats self-employed individuals differently from W-2 employees. While a standard employee has a predictable paycheck, your income might fluctuate based on the market, overhead, and business reinvestment.

Understanding Net Resources Under Texas Law

In Texas, child support is not calculated based on your total top-line revenue. Instead, the court looks at your net resources. According to Texas Family Code § 154.062, net resources include 100 percent of all revenue you receive. This includes wages, salary, commissions, bonuses, and, importantly for our clients, all self-employment income.

Determining what counts as income for a business owner can be tricky. For a 1099 contractor, your gross income is the total amount paid by your clients before any taxes or expenses are taken out. For a small business owner, the court looks at both the salary you pay yourself and any distributions the business makes to you.

We work with clients to ensure the court sees a clear picture of what is actually available for support. The goal is to reach a fair number that complies with state guidelines without risking your business’s viability.

The 1099 Contractor: Gross Income vs. Ordinary Expenses

If you work as an independent contractor, you likely receive a 1099-NEC or 1099-MISC at the end of the year. In the eyes of the Bexar County courts, your income is not simply the total of those forms. Texas Family Code § 154.065 clarifies that, for self-employed individuals, net resources are gross receipts minus ordinary and necessary business expenses.

But the law is specific about what counts as an ordinary expense. You might be able to deduct the cost of materials, office rent, or specialized equipment. You generally cannot deduct noncash expenses like depreciation or tax credits when calculating child support, even if your CPA deducts them for the IRS. Therefore, it takes more than a W-2 or 1099 to determine the net income for child support calculations.

Courts in San Antonio often scrutinize these deductions. If a business owner tries to claim their personal vehicle or home utilities as a 100 percent business expense to lower their child support, a judge may add those amounts back into their net resources. We help our clients organize their profit and loss statements to show which expenses are truly necessary to keep the doors open.

S-Corps/LLCs and the Challenge of Retained Earnings

S-Corporations and LLCs present a unique challenge in Texas family law cases. As an owner, you control how much you pay yourself in salary and how much you retain in the business as retained earnings. Some business owners try to pay themselves a very low salary to minimize their child support obligations or for other reasons.

Texas judges are aware of this tactic. Under Texas Family Code § 154.066, if the court finds that a parent is intentionally unemployed or underemployed, they can assign a higher income level based on what that person is capable of earning.

If your S-Corp or LLC is profitable but you are not taking distributions, the court may consider whether those funds are being hidden or are truly needed for business operations. We often assist clients in proving that retained earnings are essential for future growth or to cover upcoming tax liabilities, rather than just a way to avoid support. A lengthy, consistent history of the low salary is more evidence of a motivation other than avoiding child support.

Specific Deductions Allowed by the Texas Family Code

Once we establish your gross income from self-employment, the law allows for specific deductions to arrive at the final net resource figure. These do not include many of your IRS tax deductions. Under Texas Family Code § 154.062(d), the following items are subtracted from your total resources:

  • Social Security taxes.
  • Federal income taxes are based on the single-person tax rate.
  • The cost of the child’s health and dental insurance.
  • Union dues.

After these subtractions, we arrive at the net resources figure. The court then applies a percentage based on the number of children involved. For one child, the guideline is typically 20 percent of net resources. For two children, it is 25 percent, and it scales up from there, as outlined in Texas Family Code § 154.125. There is a lower percentage for very low income individuals and there is a cap for high earners.

As of September 2025, the maximum amount of net monthly resources subject to these guideline percentages increased to $11,700. The cap is adjusted annually for inflation but the number that applies will be the current cap at the time your case goes to trial. For parents earning above this cap, the court applies the percentages only to that amount unless the child has proven needs that require more.

Contact South TX Family Law for Guidance

Calculating child support for business owners is rarely a simple math problem. It involves a deep dive into your corporate structure, your tax strategy, and the specific rules of the Texas Family Code.  Although the judge will generally follow the guidelines, there is an element of persuasion involved. We understand the unique pressures facing S-Corp owners, LLC owners, and 1099 contractors in San Antonio and Hill Country Village.

Our team works to ensure that your child support orders are based on accurate data and fair interpretations of the law. If you are preparing for a child support hearing or need to modify an existing order, we can help you organize your financial evidence and present a clear case to the court.

At South TX Family Law, we focus on providing clear, straightforward legal advice to help you protect your business and your relationship with your children. To discuss your specific situation and learn more about how we can help, please call us at 210-775-0353.