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Imputing Income for Child Support
When will a court impute income to parents to calculate their child support?
It is quite common for the income of one parent particularly a father to plummet when marital warfare breaks out. It is also not uncommon for one or both parties to lose a job or to stop working overtime that had been customarily performed. Child support awards are based on the income of both parties. What happens if the income of the father declines drastically? What should the court do about child support obligations under such circumstances? These vexing issues occur in many family law disputes.
The concept of imputing income to parents who are not actually earning that income is one of the considerations that are built into the child support guidelines. If the court finds that either parent is, without just cause, voluntarily underemployed or unemployed, then the court will impute income to that person. The court will impute income to the parent based on 1) the potential employment that the parent has on his/her work history and skills, 2) a review of the past work history of the parent, 3) a review of the Department of Labor Wage Survey.
In summary, the fairness of a child support award that results from the application of the child support guidelines is dependent on an accurate on a determination of a parent's income. If the court finds that either parent is, without just cause, voluntary underemployed or unemployed then it may impute income to the parent. The court will follow several principles when it decides whether or not to impute income to determine a child support award. First, the court will impute income based on the parent's potential employment and earning capacity. The court will review the parent's work history occupational qualifications, educational background and the prevailing job opportunities in the region. Second, if potential earnings cannot be determined then income may be imputed by reviewing the parent's most recent wages on file with the New Jersey Department of Labor (NJDOL). Third, if there are no adequate records on file with the NJDOL, then the court may impute income based on full time employment at the New Jersey minimum wage.
Do the child support guidelines permit a court to impute income to a parent?
Yes. In the world of divorce law, it is quite common for a husband to undertake efforts to have his income appear as low as possible. When the parties divorce, then quite often the husband will refuse to accept any promotions at work. The husband will work less overtime that he usually worked during the marriage. Moreover, the husband often will have any bonuses deferred. In summary, once a divorce starts many husbands play all types of games to make it appear that their income is as low as possible.
The Child Support Guidelines permit the courts to try to solve the problem of husbands who try to hide their income, who are underemployed, or who are unemployed.
Rule 5:6A, Child Support Guidelines states that Appendix IX of these Rules shall be applied when an application to establish or modify support is considered by the court. Appendix IX, "Considerations in the Use of Child Support Guidelines," paragraph 12 entitled Imputing Income to Parents, provides the following:
The fairness of a child support award resulting from the application of these guidelines, is dependent on the accurate determination of a parent's net income. If the court finds that either parent is, without just cause, voluntarily underemployed or unemployed, it shall impute income to that parent ...... (Emphasis added) Pressler, 2005 N.J. Court Rules.
How does a court determine "Earning Capacity" in an imputed income case?
When a parent is determined to be voluntarily unemployed or underemployed without a good reason, or for the reason of avoiding child support, then the court is authorized to impute income at "earning capacity" The determination of earning capacity is a factual matter, and it is determined by the court on several factors and evidence. The most common type of evidence is the party's earnings history.
Earnings history, however, may paint an inaccurate picture. A father may not be able to earn at his last best job because of changes in the job market or changes in the person's health or education. Thus, the court will want to review evidence of the current sate of the person's particular job market.
What are the specific factors that a court considers to determine whether income should be imputed to a parent and the amount of such income?
The court will consider what was the employment status and the earning capacity of that parent. The court will review the past tax returns of the parent. The court will ascertain what is the reason for the parent being unemployed. If the parent has a legitimate reason then the court will impute less income to him. The court will also determine if there are any other assets available to the parent to enable him to pay child support.
What is the main resource that the court uses to determine how much income to impute to a parent?
The court uses a handbook called the New Jersey Department of Labor Wage and Occupation Survey. This book is published every year. The book is very comprehensive, and it provides a breakdown of the average wage for every type of profession. The survey is broken down into a statewide average salary for every profession. Moreover, the survey is also broken down for the average salary for any profession in all of the individual counties.
The New Jersey Department of Labor also has an excellent website at www.state.nj.us/labor.come. The website allows you to research occupational employment and wages through the state. It also has tabs for job searches, career explorers and job training. These can be helpful tools in determining when and how income should be imputed. It may also be revised before hiring an employment expert to see whether the cost of such experts can be avoided.
What type of evidence can I submit to the court to prove that my unemployment or underemployment is a true hardship?
If a father becomes involuntarily underemployed or unemployed then he should retain copies of all termination notices, cover letters seeking employment, lists of appointments and interviews, job searches and a calendar of daily efforts made to find suitable employment. This evidence can prove to a court that the father was in fact fired or laid off from work. Moreover, this evidence can also prove that the father has been making a good faith effort to find suitable employment.
My soon-to-be ex-wife is a stay-at-home mother. Should the court impute income to her when it calculates any alimony award?
The concepts of imputing income are also used when the courts calculate any alimony awards. There is no published case in New Jersey that mandates the imputation of income to a custodial parent who chooses to stay at home with the children. When a court establishes any alimony award, if income is imputed to a stay-at-home mother, then the amount of alimony will be reduced. Therefore, in many divorces the issue of whether a stay-at-home mother will be imputed any income is crucial. In most cases, the court will impute some type of income to a stay-at-home mother. Another vexing issue is how much income a court will impute to a mother.
In my experience, each case is reviewed by the court on a case by case basis. The court will consider the following factors when it decides how much income to impute to a stay-at-home mother:
My ex-husband is the ultimate deadbeat. Every other month he files a frivolous motion to reduce his child support…
He does not even try to find a better paying job. What evidence can I present to the court to prove that he is acting in bad faith, and that he has an excellent earning capacity?
The following types of evidence may enable you to prove to a court that a lazy husband is underemployed or that his unemployment is made in bad faith:
What evidence can I submit to the court to prove that my difficulties in finding employment constitute a "change in circumstances" to justify a reduction in my child support?
The following types of evidence may enable you to prove to a court that you have a legitimate case for a child support reduction based on a "change of circumstances"
I have lost my job as a software engineer…
Unfortunately, all of these types of jobs are now only available in India. I am now serving slurpees at the local Seven Eleven. Can I now make an application to reduce my child support?
The answer to this question is uncertain. Courts have consistently rejected requests for a child support modification that are based only on a temporary "change of circumstances." Thus, the court will consider the issue of whether the husband is obligated to find other employment that would enable him to pay his child support. The court will want to make inquiries if any other higher paying jobs are available. The court will want to ascertain why you lost your job as a software engineer. Finally, the court will want to determine if there are other available jobs in your field.
In my experience, most courts will schedule a plenary hearing to determine if the father has made a good faith effort to find another job at a comparable salary. Many courts will grant a father a child support reduction only for a short period. Many courts will reduce child support for only three months, and then recall the case. The court will then determine if the father is making a good faith effort to find new employment at a comparable salary.
If the court is not satisfied that the father is making a good faith effort to find suitable employment, then the court may increase the child support to the original amount. If the father still has not found suitable employment, then the court may continue the child support reduction for an additional short term period.
As a side note, the father may also want to make a request to the court for child support credits for any slurpees that he may have given to his children while he was at work. An argument can be made that the father should receive a dollar credit for each and every slurpee that he gives to his children.
In New Jersey, a separation agreement is any legal document signed by both spouses outlining the terms of the separation. Subjects resolved in a separation agreement can include child support, child custody, debt allocation and asset distribution. Notarizing the document ensures its validity, since there is no such case-type in New Jersey that provides for a "legal separation." Spouses wanting child support during the separation period, however, must file a claim with the New Jersey probation department.
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"A Plain English Guide to Protecting Your Children"
Author: Mary L. Boland, Attorney at Law
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