What does imputation of income mean?

 

In a New Jersey divorce, it is crucial to know the income of both parties.  It is equally important to know what each is capable of earning. The income of the parties must be known in order to resolve issues like alimony and child support. In many divorces, however, the income-producing spouse suddenly acquires RAIDS (Recently Acquired Income Deficiency Syndrome).  This spouse argues his/her income is below what it was during the course of the marriage.  This results in the argument that the support obligation should be less. Sometimes the reason for the decline is legitimate. Sometimes it is not. It is vital to assess whether or not there is just cause for the voluntary unemployment or underemployment.  Does there need to be an imputation of income?

4 Key Factors

Our law provides that the court must analyze four factors in making this assessment:

1. The employment and earning capacity of that party had the family remained intact.
2. The reasons and intent behind the voluntary underemployment or unemployment.
3. The ages of the children in the parent’s household as well as child care alternatives.
4. The extent other assets are available to pay support.

Once the aforementioned factors are considered and applied to the facts of a particular case, a determination can be made as to whether or not a party is underemployed or unemployed.

Imputation of Income

When determined that they are either underemployed or unemployed, the next step is to impute an income to that party. Imputation of income means that a rate of income is fixed for a party regardless of his or her current circumstance. To impute income to an underemployed or unemployed party, the first places to look for the amount of income are the New Jersey Department of Labor, Compendium of Wages and the party’s most recent wage history, such as a pay check or Social Security earnings history statement. At a minimum, one may have a minimum wage imputed to them. In some cases, employability experts are hired to perform a detailed evaluation of the party’s ability and capability to earn and an expert opinion is offered as to the amount of income that should be imputed.

Once income is known, agreed upon or imputed, the parties can move forward and discuss support and other financial considerations relevant to their case and hopefully resolve all issues in their divorce amicably and efficiently.

Please contact me at jlawrence@lawlawfirm.com if you have questions about this post or any other family law matter.