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The Divorce Encyclopedia
Imputed Income

Term Definition Imputed Income - a concept often applied to one or both parents during child support calculations.
Application in Divorce In general, for purposes of spousal and child support, courts consider the earning capacities of the parties, not their actual income.

One party in a divorce often contends that he or she cannot work or no longer has the income he or she had at the onset of the action. The opposing party then argues that the income should be imputed, or attributed, for child support purposes. This can be argued by demonstrating that the person has the ability to work and that the unemployment is elective.

Calculations involving the imputation of income frequently happen when the parties of a divorce appeal for modifications of alimony or child support as a result of a change in circumstance.

Courts impute income in two ways -- the first, called as a matter of fact, and the second, as a matter of law. In the first, the court limits itself to the actual earnings a party reports; in the second, it considers the actual earning power of the party.

Imputed income turns on the rationale that a spouse and children have a right to income that would have been provided had the party paid "diligent attention" to his or her career, occupation or profession. For example, the courts may impute a certain income level to a doctor who for whatever reason abandons his profession to become a street musician. The rationale behind the imputation of income is that no one should be allowed to escape obligations by taking actions that make the fulfillment of such obligations impossible.

Elective unemployment or underemployment is seen by courts as evidence of bad faith in the calculation of child support. The legal fiction of imputed income is a way the courts remedy that.

Courts have found that the desire to stay at home with small children is a good-faith reason for not imputing income to her.

Imputation of income is done for spousal or child support only. A court cannot impute income as marital property and then divide it equitably.

In the calculation of child court may impute income from nonincome or underproducing assets. Nonincome assets are the so called barren assets that produce no return until they are sold, e.g., undeveloped real estate, artwork.

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