When Imputed Income Becomes the Basis for Support

Imputed income

Child support and spousal support represent two critical issues in family law matters. In many cases, calculating numbers means a simple review of paystubs. However, it’s not always so plain and simple. Sometimes, imputed income becomes the basis for support.

The onus falls on the court when it comes to imputing income. In a typical scenario, one of the parties shows little or no depicted income.  By the same token, the court might find it necessary to impute income in more substantial matters. Take, for example, the business executive forced out of a company. His or her earning power comes into play.

In the meantime, imputing income for self-employed individuals becomes a necessity quite frequently. This often comes with allegations that the business owner intentionally hides money.  The court also intervenes when  one party appears to choose to earn less as a means of avoiding support payments.

Unemployment presents another issue when it comes to imputing income. Unfortunately, some individuals voluntarily leave jobs to avoid paying support.  In any event, the court comes up with a monetary figure, essentially assigning the income rate. Employability factors into the equation, as do other considerations.

It’s not unusual for either or both sides to balk at the court’s decision when it comes to imputed income. A New Jersey Appellate Division unpublished decision recently vacated an award of alimony and child support. Ultimately, the determination included the conclusion that the trial court judge improperly imputed income.

Alimony and Child Support Calculated on Imputed Income

First, you should understand what it means when the New Jersey Appellate Division decides a case marked as an unpublished opinion. According to New Jersey Court Rule 1:36-1, unpublished opinions do not constitute a precedent and are not binding upon any court.

The term “unpublished” refers to the fact that the case does not show up in any actual lawbooks. . In some cases, the court uses initials to protect the privacy of the individuals involved in the litigation.

The court used the names of the husband and wife in the matter it decided on December 26, 2019. However, this blog interchanges referral to the husband as the plaintiff, and the wife as the defendant.

After entry of the Final Judgment of Divorce (FJOD) , the wife appealed portions of the trial court’s decision. One aspect involved her contention that the “Family Part judge “erred in calculating alimony and child support by imputing income to [her] and by failing to impute income to . . . plaintiff.”

According to the case history, the couple married in the year 2000. They had one child together in 2004 and separated eight years later. At that time, the mother and child moved in with the plaintiff’s parents.

At the time of their marriage, the defendant already suffered from Multiple Sclerosis (MS). Her disability prevented her from working, and in 2002, she began receiving disability payments from the Social Security Administration. Accordingly, the court imputed income to the wife in the amount of $240 per week.

When it came to the husband’s earnings, the court considered evidence presented during the thirteen-day divorce trial.  Notably, a number of witnesses testified at the trial. However, the only expert who provided testimony addressed custody and parenting time issues.

The Court Deviated from the Child Support Guidelines

At the trial, the husband presented documentation regarding his employment. He earned approximately $150K in commissions during the two years before the trial. The court annualized the husband’s earnings based on the first five months of 2018. Remarkably, the amount dropped from the $150K figure to $112K.

By way of explanation, the plaintiff blamed the reduction in earnings on a change in his company’s commission formula. However, the husband also admitted that he reduced his hours to study psychology and research parental alienation. Furthermore, the plaintiff lowered his time at work to prepare for the divorce trial.

As you may already know, parties submit worksheets in conjunction with child support applications. Although the wife filed a monthly budget of $7,700, the court rejected that amount. Instead, the judge classified many of the expenses as fictional. Additionally, the judge felt that the budget didn’t reflect the assistance the mother received from her parents while living with them. The court assigned what is called a “reasonable budget of $4,300.”

For whatever reason, the judge not only granted the mother full custody but also” barred any parenting time for the plaintiff until further order of the court.”  This proves relevant as custody and parenting time factor into New Jersey’s Child Support Guidelines.

Without question, the courts may modify or disregard the guidelines. However, this requires a showing of good cause to justify the deviation. The court did not offer an explanation as far as ordering the plaintiff to pay $90 per week in child support. Notably, this represented an amount different than that depicted in the guidelines.

Additionally, the trial court ordered the husband to pay the wife $200 in alimony and required him to maintain medical insurance through his employer for the child. The plaintiff also needed to pay all unreimbursed medical expenses.

Mother Disagreed with Support Payments

After the court’s decision, the trial court judge heard the defendant’s motion for reconsideration. First, the judge recognized that she failed to explain why she deviated from the guidelines. More specifically, she “reasoned an injustice would occur if plaintiff was required to pay child support pursuant to the Guidelines because he “is not going to see his child,” and the parents and the child  “contributed equally” in the circumstances that led to granting sole custody to defendant and denying plaintiff any parenting time.”

However, that wasn’t the only issue that the mother presented to the court. She argued that the judge didn’t impute income to her husband. After all, it seemed apparent that he intentionally lessened his income to avoid support payments. Nevertheless, the trial court remained firm and did not change the order. The mother filed an appeal, also claiming the judge erred in imputing income against her.

On Appeal

On appeal, the court agreed with the defendant. In the first place, the trial judge “imputed income to the defendant because the judge found “no medical testimony to that effect was presented.” Absent testimony to the contrary, the Family Part judge determined that the mother’s “unemployment was voluntary because “there [was] no evidence that she was ever told by any medical professional that she should” not work.” The judge cited other reasons as well for the decision to impute income.

Case law does suggest that the “”party asserting inability to work due to disability bears the burden of proving the disability.” However, the Appellate Division asserted that when the Social Security Administration finds a party disabled, it’s up to the “opposing party to refuse that presumption.”

As far as the wife’s contention that her husband was intentionally underemployed, the appeals court found the Family Part judge never addressed the issue. Additionally, it was critical to consider earning power and the parties’ marital lifestyle in determining support.

In conclusion, the Appellate Division vacated the alimony and child support portion of the divorce judgment. It was remanded to the lower court for reconsideration.

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The Law Offices of Sam Stoia understands the complexities of imputed income. Let us help you understand how this might apply to your situation.  Give us a call to schedule an appointment.

When Imputed Income Becomes the Basis for Support