Imputed Income: How It Can Affect the Support You Pay or Receive

When the courts determine issues of financial support in a divorce, they try hard to be fair. Sometimes, that means allocating income that's significantly larger than it is on paper to one of the parties involved. Learn more about how imputed income can affect the support that you either receive or pay.

What is imputed income?

Imputed income is the difference between what someone says that they earn and what the court thinks that they could earn, if sufficiently motivated. By imputing the income, using it as the basis of the calculations used to determine child support or spousal support, and making the person involved legally responsible for that support payment, the court hopes to provide that motivation.

This can work for you or against you, depending on which side of the situation you're on. For example, there are plenty of people whose self-employed spouses have suddenly claimed that they were in a financial slump. While the business seems to be thriving, they'll swear in court that they've had to sacrifice their personal earnings to keep the company afloat. The court has the power to look past artificial manipulations of numbers and assign incomes to those spouses that are more in line with what they've made in years past.

On the other hand, there are stay-at-home spouses who swear that they don't have the means to be self-sufficient at the time of their divorce. However, if they have a college degree or a professional license or donate their time 30–40 hours per week to a charitable organization, the court has the power to impute an income that's equitable with what they could be earning if they reentered the workforce.

How does the court impute income?

Generally speaking, whenever one side alleges that the other is deliberately manipulating the financial figures around the support calculations, there's likely to be a court battle. The court is going to look at a number of different factors in order to determine if the unemployment or underemployment really is voluntary or not. Here are some things the court will consider.

  • Has the underemployed or unemployed spouse's industry recently undergone a downturn that could explain the loss of income or inability to find work?
  • Are there health problems that are limiting that spouse's ability to work full-time in his or her profession?
  • Is there any evidence that he or she is spending more money than he or she supposedly receives from a business?
  • Is there evidence that he or she turned down a promotion, quit doing the usual overtime, or took a lower-paying job voluntarily?

There are times that the court will find someone's voluntary reduction in income to be reasonable even though it does affect the amount of money they can contribute either to their own support or the support of their children. For example, if you are unemployed because you are trying to get your college degree—which will ultimately lead to more income and a better financial situation for both you and your children—the court may consider that entirely reasonable.

Do you think that the income calculations being used in your divorce case are unfair? If so, contact a divorce attorney in your area to discuss your case.