Most people involved in a divorce or child support case expect that child support or alimony payments would be calculated based on your actual earnings, but in some cases, the payment calculations are based on what a court believes you could or should be earning. This is because of a concept in family law that allows the court to impute income for a party in the case. When a court imputes income, it assigns an income number that is calculated by what a person could be or should be earning, rather than what they actually currently earn. Imputing income can have far-reaching effects in child support and alimony cases.
Quick Answers
- In family law, imputed income is used to determine child support or spousal support (alimony) payments by assigning a parent’s potential earning capacity.
- The court considers factors such as employment history, skill set, or voluntary unemployment when deciding the amount of imputed income.
- Legal strategies for handling disputes about imputed income include hiring legal counsel and providing evidence and calculations with the guidance of the attorney.
Imputed Income in Family Law
Imputed income is a concept in family law that assigns income to a parent to calculate equitable child support and alimony payments, given factors such as employment history and skills. The court may impute income when a parent is earning less than their potential, either by choice or through intentional underemployment. The consequences of not meeting child support obligations based on imputed income can be severe, including wage garnishment, seizure of federal tax refunds, and imposition of fines.
The Essence of Imputed Income
Imputed income refers to the income attributed to a parent, even if they have not actually earned that amount. This estimated income is assigned to the parent by the court for the purpose of calculating child support or alimony. It is typically applied when a party’s past earnings and earning capacity are considered, especially in cases of underemployment or unemployment, and when a party is voluntarily unemployed or underemployed.
The earning capacity of a parent is calculated based on their potential to earn income, rather than their actual earnings or income, focusing on factors such as:
- Education
- Work experience
- Skills
- Job opportunities
The court may take the parent’s earning capacity into consideration in place of their actual income when determining child support or alimony payments.
Application in Child Support and Alimony Cases
A judge may assign additional income to a parent when it is clear that the parent has the capacity to earn more than they currently do. This ensures that both parents contribute to the financial support of the child according to their potential earnings based on what the court deems to be equitable. Courts may choose not to impute income if the parent is making a good faith effort to seek employment or pursue higher education, or if they have traditionally been the “stay-at-home” parent.
If a parent is suspected of concealing their income, one might need to consult a lawyer and consider legal options for subpoenaing the other party’s financial records, paystubs, or business documents to uncover any potential undisclosed assets. When imputed income is used in child support cases, the court assigns a greater income to a parent than what they are actually earning. This increased income is then used to determine child support payments.
Criteria for Imputing Income
Courts factor in several elements such as employment history, skill set, and voluntary unemployment when deciding to impute income. In calculating imputed income, factors such as employability, education, job skills, and past work history are taken into consideration.
Considerations that may influence the court’s decision include:
- The parent’s employment background
- Educational qualifications
- Specialized skills
- Earning potential
- Whether the parent is attempting to conceal income or has the ability to generate income.
The employment history plays a significant role in the decision to impute income by taking into account:
- the payor’s qualifications
- historical earnings
- vocational training
- prevailing level of income in the same area for similar jobs.
Evidential Requirements for Imputing Income
Courts require evidence of deliberate underemployment or hidden income to impute income.
Substantial evidence for demonstrating earning capacity in family law may include factors such as past employment history, education and training, skills and qualifications, job opportunities in the relevant market, and expert testimony. Courts may also consider the party’s voluntary unemployment or underemployment and their capacity to earn income based on their earning potential.
Various methods are available to detect and prove hidden income in a court of law, such as:
- Financial investigation
- Lifestyle analysis
- Forensic accounting
- Business valuation
- Gathering evidence
Exceptions to the Rule
Certain exceptions exist for imputing income. For example, the court may not impute income to a person whose ability to generate income is affected by a disability. However, the decision to earn a lower income must be deemed to be a reasonable decision by the parent. Caretaker status may also be considered an exception. If a parent is a caretaker and unable to work or seek employment due to their caregiving responsibilities, their income may not be imputed for child support or alimony calculations.
Proof of genuine efforts to find employment can also serve as an exception to income imputation. Evidence of intentional underemployment or voluntary unemployment is typically required. For instance, if a parent has deliberately reduced their income, a court may decide to impute additional income for child support purposes.
The Impact of Imputed Income on Child Support Calculations
By adjusting a parent’s income, imputed income influences the support obligation, thereby impacting child support calculations. In Illinois, imputed income is used if a spouse is deliberately earning less than they could be earning. For example, imputed income may be used if a spouse:
- Resigns from their job voluntarily
- Takes a low-paying job to reduce their child support obligation
- Does not make reasonable attempts to find and maintain employment
The child support formula is impacted by imputed income across different states. Generally, in Illinois using the Income Shares Model, the parent’s ordered income, and all sources of a parent’s income are considered when calculating imputed income. Imputed income is often employed when a parent is unemployed or their income is unknown.
Modifications or adjustments may be applied to child support calculations when imputed income is taken into account.
Understanding the Child Support Formula
The child support formula considers the income of each parent and the percentage of parenting time. Imputed income can modify the calculation. The formula is calculated by considering both parents’ income. The exact method used may differ by state, however, common approaches include the Income Shares Model (which is used to calculate Illinois child support) and the Percentage of Income Model.
Adjustments and Modifications
Modifications or adjustments may be applied to child support calculations when imputed income is taken into account. These adjustments may include the calculation of child support based on a higher income than the parent is presently earning, taking into account the potential income the parent could earn based on their education, training, and work history, all of which may affect their ability to pay child support.
Courts can modify child support orders based on changes in income or other circumstances. The legal process for requesting a modification in child support generally involves the following steps:
- Collecting relevant evidence
- Filing a motion
- Notifying the other parent
- Attending a hearing
- Waiting for a judicial decision
Legal Strategies for Handling Imputed Income Disputes
Strategic legal processes are helpful to handle disputes about imputed income. These can include maintaining a record of job search attempts, requesting a vocational evaluation, providing testimony and financial documents, and following the guidance of an attorney. A legal professional may assist with imputed income disputes by offering legal analysis, collecting evidence, making arguments, negotiating and settling, and providing court representation.
Seeking Professional Legal Advice
Professional legal advice is key in imputed income cases due to their complexity and the need for a comprehensive understanding of the law. The duties of a family law attorney in managing imputed income disputes include:
- Providing legal counsel and guidance
- Collecting evidence
- Arguing in court
- Negotiating
- Helping with calculations
- Educating clients about the process
- Representing clients in court or mediation.
Engaging a family law attorney for matters concerning imputed income can offer several advantages, such as:
- Legal proficiency
- Familiarity with imputed income laws
- Negotiation and advocacy capabilities
- Guidance and support
- Timely resolution of the case
Preparing for Court Proceedings
Consulting a family law attorney is recommended for gathering and presenting evidence for a court case related to imputed income in family law. A lawyer plays an important role in the preparation for court proceedings involving imputed income.
In a court case involving imputed income, some legal defenses that may be used include contesting the voluntary nature of unemployment or underemployment and questioning the accuracy of the imputed income calculation. When presenting their case for requesting imputed income of the other party in court, a party may most effectively do so by providing evidence of the other party’s previous earnings and earning capacity. They should also explain why imputing income is necessary and how it will influence the divorce-related or child-related calculations.
Summary
In summary, imputed income can be a critical aspect of family law that has significant implications on child support and alimony cases. It refers to the income that a court assigns to a parent based on their earning capacity rather than their actual income. This action is taken by the court to ensure that both parents contribute equitably to the financial support of their child. However, it is also a complex area with various factors to consider, exceptions, adjustments, and legal strategies needed for dispute resolution.
Consult with Family Law Attorney Zachary Townsend
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