What is “imputed income?”
Imputing income simply means that the court treats the parent’s income as if it is more than what the parent is actually earning. If a court determines that a parent is unemployed, underemployed or earning less than what he or she was previously earning to avoid child support payments, the court can impute a certain amount of additional income to that parent.
Do the child support guidelines permit a court to impute income?
Yes. New Jersey uses specific guidelines to determine child support payments based on both parents’ annual incomes. These guidelines also permit the courts to solve the problem of parents who intentionally reduce their income in order to avoid child support. Rule 5:6A of the New Jersey Child Support Guidelines allows a court to impute income whether the court is making the first child support order in a case, or modifying (changing) an existing child support order. Appendix IX-A of the New Jersey Child Support Guidelines states:
The fairness of a child support award resulting from the application of these guidelines is dependent on the accurate determination of a parent’s net income. If the court finds that either parent is, without just cause, voluntarily underemployed or unemployed, it shall impute income to that parent.
What factors will the court consider in determining whether to impute income?
According to Appendix IX-A of the New Jersey Child Support Guidelines, the court should consider the following:
- the reason and intent for the voluntary underemployment or unemployment
- what the employment status and earning capacity of that parent would have been if the family had remained intact
- the availability of other assets that may be used to pay support, and
- the ages of any children in the parent’s household and child-care alternatives – if a parent is caring for very young children, the court may consider that in deciding not to impute income to that parent.
Reason and intent for the unemployment or underemployment
Before imputing income, a court will want to know why the parent is unemployed or earning less than could be earned. The court may hold a hearing and receive evidence to determine whether the parent has a legitimate reason for reduced income such as:
- the parent lost a job because his or her company downsized or went out of business
- the parent holds a position that relies on commissions (like a real estate agent) but hasn’t been able to close any deals due to the economy, or
- the parent was terminated and hasn’t been able to find a new job despite consistent and diligent efforts.
Under such circumstances, the court may find that the parent’s unemployment or underemployment is justified, and decide to impute very little income or no income at all. Courts will also look to see whether this parent has any assets available which could be used to pay child support.
If you’re in one of the above or similar circumstances, keep copies of any termination notice or other documents proving that your job loss was involuntary. Be prepared to show that you’re actively engaged in vigorous and good faith efforts to find a new job. Keep copies of resumes and cover letters sent to prospective employers, printouts from job boards, and a calendar of your daily efforts to find work.
If you’re on the other side of this situation, and you believe your child’s other parent has no good reason for unemployment and/or is not making efforts to gain employment, you should ask for copies of all of the foregoing documents. Some situations that tend to show bad faith and which may lead a court to impute income include:
- when a parent that holds a high-paying, highly-skilled job (like a surgeon) voluntarily quits (after separation) to take a volunteer position or a lower-paying, low-skilled job
- when a parent, without good reason, turns down a promotion, increased hours or overtime, and
- when a parent delays the receipt of a bonus or commission.
You will want to show the court that your child’s other parent has the ability to work (if unemployed), or to earn more than he or she is currently earning. If possible, you may want to present the court with evidence of bad faith including:
- documents or other evidence showing that your child’s other parent voluntarily quit a job
- evidence that your child’s other parent delayed receipt of a bonus or commission or rejected a promotion or increased hours, and/or
- evidence, such as witness testimony or even Facebook posts that show your child’s other parent is acting in bad faith (e.g. emails or postings stating that he or she will do anything to avoid paying child support).
If you do find such evidence, it must be in a form that is admissible in court. If you’re unfamiliar with the rules of evidence, you might want to speak with an attorney who is experienced in family law hearings.
However, proving bad faith is not necessarily a requirement to getting income imputed to your child’s other parent. In some cases (such as the surgeon example above) it’ll be very difficult for a parent to convince a court there is any reason good enough to justify quitting a high-paying job when there are children involved that need support.
How do courts determine the amount of income to impute?
If there is no good reason for a parent’s reduced income, the guidelines provide that a court “shall” impute income using one of three methods in the following order of priority.
Earning capacity is the amount of money a parent could earn. Courts can figure out earning capacity using the parent’s work history, occupational qualifications, skills, educational background, prevailing job opportunities, previous earnings, and average wages in the region.
The court may refer to the New Jersey Department of Labor and Workforce Development’s website. This site provides statewide labor market information including occupational employment statistics such as wage and employment estimates. It also provides online job searches which may constitute evidence regarding the local job market.
Most recent wage or benefit record
If potential earnings can’t be determined, then the court may impute income based on the parent’s most recent wage or benefit record – a minimum of two calendar quarters - on file with the NJDOL.
If a court can’t determine earning capacity, and there is no NJDOL wage or benefit record available, then a court will impute income based on full-time employment (40 hours per week) at minimum wage.