How to Understand Imputed Income in a Child Support Case
There are many cases where a person’s gross income does not reflect their professional capacities due to marital or family circumstances.
When a couple is divorcing and has children, many factors determine the custody arrangement, how parenting time will be divided, and how much child support will be required from the non-custodial parent. So how is income calculated to determine child support payments? In some cases, the New Jersey Superior Court: Family Part looks at each parent’s income to determine child support payments, but there are situations in which the determination of child support is not so cut and dried. Read on to learn more.
How is income determined?
Determining income is a straightforward process, right? It’s as simple as looking at a person’s income tax filings? Unfortunately, it’s not that simple to determine what a parent’s income is. The New Jersey Superior Court considers many factors when determining income, including business expenses that have greatly decreased the person’s income, non-monetary assets and other in-kind goods and services, and capacities for employment that have not been utilized due to the marriage or other reasons.
New Jersey business owners most often have non-monetary assets that can be included in their gross income. Additionally, their net profits are considered income for purposes of determining child support payments; only the business’s ordinary expenses are left out of the calculation of gross income, and those expenses must be directly related to the functioning of the business. Because there are many cases in which a person uses their business account to cover personal expenses such as car payments, etc., the Superior Court is hypervigilant in determining that all business expenses withdrawn from the person’s gross income are directly related to the running of the business. If the other spouse’s attorney finds a discrepancy in what is claimed to be a business expense, the Court will confirm and return the expense to its rightful place as part of the business owner’s gross income.
For those who are in traditional employee situations, their gross income is calculated as the amount of money earned before state and federal taxes are withdrawn. In the case of all New Jersey residents for whom the Superior Court is considering child support payments, their financial investments can be considered as an element of their gross income that will augment the amount of child support payments they are required to pay.
This Superior Court’s consideration of a partner’s status of employment – whether they are unemployed or underemployed due to marital or other circumstances – is the source of the Court determining whether they need to impute a spouse’s income in determining how much the person will be required to pay in monthly child support payments.
What is imputed income, and how does it affect child support payments?
There are many cases where a person’s gross income does not reflect their professional capacities due to marital or family circumstances. For example, a professional teacher who decides to become a stay-at-home parent does not have the income afforded to New Jersey teachers at their level of training, though they may be quite employable. In these cases, the Court may determine the person’s income if they were working and require that the person pay child support payments in alignment with that income. This is called imputing income.
The Court and other legal experts will review the person’s training, experience, education, and professional qualifications. They will review where the person lives and look at the going rate for professionals in that area with their level of qualifications. Because some people voluntarily choose to be unemployed or underemployed to lessen the financial responsibility to make child support payments, New Jersey Courts counter this by imputing income. This is the case both for people who avoid paying child support by becoming voluntarily underemployed or unemployed and people who lessen their professional impact to receive more in child support payments. In both of these cases, the New Jersey Superior Court: Family Part system is poised to conduct an audit of personal and professional income and expenses to ensure that the child receives the full extent of child support payments that they have the right to.
If you are divorcing and in the midst of a child support determination, you must have the support of a family law attorney.
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