Blog Layout

How Do PPP Loans Affect Child Support?

Aug 26, 2020

At Fairell Roy & Associates , we’ve received a number of questions about child support, child custody, divorce, and other topics in family law that have been complicated by the COVID-19 pandemic. Many people who have received loans under the Paycheck Protection Program (PPP) are wondering how, and if, their loan will be considered a source of income that needs to be reported to the court and considered in their child support payments. In this post, we will provide our readers with a refresher on the Paycheck Protection Program and discuss how it relates to child support payments.

If you have any additional questions about the material discussed in this post, or if you need to speak with a family law attorney in Atlanta regarding child support, child custody, or filing for divorce, contact our firm to schedule a virtual consultation.

The PPP & Child Support Payments

The PPP is part of the $2 trillion Coronavirus Aid Relief & Economic Security (CARES) Act that was rolled out in early April. It is designed to support businesses with fewer than 500 employees maintain payroll and other operating costs, with some restrictions pertaining to certain industries.

If you’re a business owner who received money through the PPP, then you might be relieved to know that the loans supplied by the PPP do not count as income. To understand why, let’s look at a simplified model of how business owners typically make money from their operations.

Business owners typically have two revenue sources that are directly tied to the business: their paycheck and their net profits, or whatever’s left after paying employees, rent, and other operating expenses.

The loan supplied by the PPP doesn’t fit into either of these two categories — the business isn’t receiving any additional money as a form of revenue; it just has an extra reserve of funding from which it can draw to stay afloat.

However, as with all topics under the umbrella of family law, there are hypothetical situations in which an individual could manipulate their child support obligations.

Suppose, for instance, a business owner voluntarily eliminates their salary in order to cover the costs of running their business and secures a loan through the PPP. There is a chance that their child support calculations would be affected, as their income has technically been significantly reduced.

There is also the issue of loan forgiveness. As we discussed at the beginning of this post, forgiven loans are not considered to be taxable income. However, it could be argued that a business is still receiving some form of untaxed profit, which does need to be factored into the business owner’s ability to fulfill their child support obligations. After all, they are still receiving the same amount of income that they made prior to the pandemic; it’s just coming from a different source.

If your child support payments have been affected by the PPP, we recommend that you contact our office to speak with an experienced child support attorney who can evaluate your specific circumstances.

Speak With a Family Law Attorney In Atlanta

As you can see from reading today’s post, topics in the intersection of COVID-19 and family law can get extremely complicated. At Fairell Roy & Associates, we are doing everything we can to help families navigate these unprecedented challenges and find a place of hope and stability.

If you would like to learn more about how you can support yourself and your family as we navigate COVID-19, we recommend that you read our other posts:

We post new resources on a regular basis, so please check back often if you found these posts helpful.

If you would like to engage with us on social media, we recommend that you follow us on Facebook. We hold live sessions throughout the week to answer viewer questions, so be sure to follow us and participate in our discussions if you have specific questions you would like us to address.

If you need an Atlanta family law attorney to help you with child support , child custody , divorce , or another situation, we invite you to reach out to our family law firm for a consultation.

  • Complete the form below to contact us for an initial consultation.
  • Submission of this form does not create any type of attorney-client relationship.
  • This field is for validation purposes and should be left unchanged.
Share by: