What is “Imputed” Income?

Posted in Divorce

Imputed income is an income figure that a Court may use to calculate support in situations where a party is not earning income commensurate with his/her earning capacity.  This generally means that a party is underemployed or unemployed. In such situations, after finding a party to be underemployed or unemployed, the Court will impute income to that party based upon multiple factors, including the party’s earning capacity, department of Labor statistics, full time employment at a general hourly rate and earnings history.

The rationale for the imputation of income is that both parties have an obligation to support their children to their utmost capacity.

Requirements of a Court in determining the imputation of income is appropriate: Finding that a party is voluntarily under employed or unemployed without just cause.   In determining whether income should be imputed and how much, factors a Court should consider include:   a) What the parties’ employment status and earning capacity would be if the family were intact; b) the reason that the Plaintiff is voluntarily unemployed or underemployed; c) the availability of assets that may be used to pay the support; and d) the ages of the children in the parties household and child care options available to the party.

Imputation of income may not be based upon gender or the custodial position of the parties.  However, when income is being imputed to as party staying home with young children, the parties’ income share is determined by percentage which is on line 6 of the Child Support Worksheet of child care costs that would otherwise be incurred if the parties were working full time, must be deducted from the imputed income.

Earning Capacity – A Court may impute income to a party for Child Support purposes using that party’s earning capacity.  A person’s earning capacity is determined based upon the party’s work history, occupational qualifications, education, and potential employment job applications.  A party’s work history includes his/her prior income and/or the income that would earn in a given occupation as reported by the New Jersey Department of Labor.