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Unemployment, Underemployment & Earning Capacity: Factors of Income Imputation

Unemployment, Underemployment & Earning Capacity: Factors of Income Imputation

Sometimes a person's reported income isn't the most accurate number to use when calculating child support payments or alimony payments. In these instances, the court uses a value known as imputed income.

Imputed Income: What Is It?

People do sneaky things to reduce their income in an effort to avoid paying higher child support or spousal support. A person might quit their job, work fewer shifts or even take a position that pays a lower salary.

In most states, judges presiding over divorce and child support cases are allowed to deviate from child support calculators if they don't think a parent's income is an accurate representation of the parent's earning potential.

Before arriving at imputed income, the court will attempt to determine whether the parent's unemployment or underemployment is legitimate. For example, did the individual quit his or her job, or was he or she terminated? Does the person work in an industry that's experienced mass layoffs? Is the individual actively job hunting? Has the person taken a lower-paying job simply to make ends meet while searching for a new job?

The judge will also try to determine if the individual has other assets that can be used to help make child support or spousal support payments.

If the judge determines that the person's underemployment or unemployment is legitimate and justified, then the actual income will be used when calculating alimony or child support. If the judge believes that the person has a higher earning capacity and is deliberately avoiding earning more, then the judge may choose to use imputed income in calculating child support or spousal support payments.

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