Imputed Income

Questions of imputed income arise when a person’s income diminishes while his earning capacity remains the same. Sometimes in a divorce, one party (usually the husband) may reduce his income in a bid to dodge alimony or child support. For example, the Wall Street powerhouse who quits the world of finance to become a street musician in New Orleans may raise questions of imputed income in his divorce.

In some cases, imputed income is used in child support cases when a judge believes a parent has deliberately become unemployed or underemployed for the purpose of lowering his child support payments. In such a case, the judge may impute a reasonable amount of income to that parent. This basically means the judge evaluates child support obligations based on the amount of income he believes that parent should have.

Income must be imputed for child support purposes; however, in most jurisdictions the court is not required to impute income for alimony. Since child support is determined based on a statutory schedule calculated using the incomes of both parties, the imputed income issue must be resolved before child support can be determined.

As with alimony, a trial judge may find several reasons not to impute income. The legal justification for not imputing income for child support is the same as for alimony. Generally, alimony is based on the need of one spouse for it and the ability of the other to pay it. The standards of living, as established by the parties during the marriage, usually defines part of the need portion of the equation. Offsetting the need is the amount the receiving spouse earns or could earn. The potential amount is called imputed income. That is, the trial judge may impute to the receiving spouse some amount of monthly income and calculate the paying spouse’s requirement to pay as though the receiving spouse was actually earning that amount.

The basis for the determination of the amount of imputed income is not a simple mathematical calculation. It also may, and often does, require the testimony of expert witnesses. Vocational evaluation experts examine the spouse requesting alimony to determine if he or she is capable of working.

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