In divorce, one of the most critical calculations has to do with money and preserving the financial stability of both parties. However, what happens when you or your ex is unemployed or not earning enough money? In such a situation, New Jersey Courts may decide to impute income that is based on earning capacity to ensure fairness and equitable distribution during the divorce proceedings. Let’s discuss imputed income, including what it is, its implications, and how it is used in divorce proceedings in NJ.
Key Takeaways
- Imputed income is potential income assigned to a spouse in divorce proceedings based on factors like education and work experience.
- The purpose of imputed income is to ensure fairness and prevent income manipulation in divorce settlements.
- Education, work history, local job market, health, age, efforts to find work, and past earnings influence imputed income.
- Imputed income calcuations will affect child support, alimony, and property division.
- Legal counsel, like Ziegler Law Group, LLC, can help challenge imputed income by demonstrating limitations or addressing underemployment.
What is Imputed Income?
In a divorce proceeding, imputed income refers to the potential income that a Court assigns to a spouse who is not earning as much as he or she should or could be, based on their education, work experience, employment opportunities, and qualifications.
For example, if one spouse has historically been the primary breadwinner and the other spouse has not worked or has worked only part-time during the marriage, the Court may impute income to the non-working or underemployed spouse when determining issues such as spousal support (alimony) or child support. This imputed income is essentially an estimate of what the non-working or underemployed spouse could reasonably earn if they were fully utilizing his or her education, skills, and experience in the job market.
What is the Purpose of Imputed Income?
Imputed income is calculated to ensure that both spouses are living up to their financial responsibilities to one another. In other words, imputed income is used to ensure that a spouse is not intentionally minimizing their income to avoid supporting the other party. Imputed income is also used to promote fairness and the prevention of financial exploitation of one person during divorce settlements.
What Factors are Considered When Imputing Income?
Imputing income is based on the individual circumstances presented to the Court. In fact, there are certain conditions that have to be met before a Court can even decide to impute income. Here are some of the factors that Court considers when making its calculations:
Education and Training
The level of education and vocational training of the individual is taken into account. This includes degrees, certifications, vocational training, and any specialized skills or qualifications that could impact earning potential.
Work Experience
The individual’s work history, including past employment, positions held, and length of employment, is considered. Courts assess the individual’s past earning patterns and career progression.
Employment Opportunities
The availability of suitable employment opportunities in the individual’s field or industry, as well as the local job market conditions, are taken into consideration.
Local Wage Levels
The prevailing wage rates for comparable positions in the individual’s geographic area are considered. This helps determine what a person with similar qualifications and experience could reasonably expect to earn.
Physical and Mental Health
The individual’s physical and mental health status may affect their ability to work and earn income. Courts may consider medical evidence and expert testimony regarding any limitations that could impact earning capacity.
Age and Retirement
The individual’s age and proximity to retirement may also be factors. While older individuals may have accumulated more experience and skills, they may also be closer to retirement age, which could affect their potential earning capacity.
Efforts to Secure Employment
Courts may consider whether the individual has made reasonable efforts to obtain employment or increase their earning capacity. This could include job searches, networking, attending training programs, or pursuing further education.
Previous Earnings
The individual’s historical earnings, including income tax returns, pay stubs, and other financial documents, may be used as a benchmark to assess their earning capacity.
What Impact Does Imputed Income Have on Divorce?
Imputed income will impact three key things in a divorce proceeding: child support, alimony, and property division. Even people who are currently unemployed, imputed income means that you will have to pay alimony and child support based on what you could potentially earn in the best position available to you. This also means that it is not going to consider what you are currently earning and could be higher than your current paycheck. Keep in mind that imputed income is calculated in an attempt to preserve fairness and to ensure that dependants (children) have the best support available to them.
Imputing Income Defense
Despite the purpose of imputing income in a divorce in New Jersey, it can lead to hardship. In this event, it is recommended to seek the aid of a New Jersey divorce lawyer like those at Ziegler Law Group, LLC. A lawyer can help mitigate the impact of imputed income.
For example, a lawyer may help you assert the fact that your earning capacity is not what the Court has decided it could be. Typically, this involves providing evidence about a physical or mental issue that hinders the ability the work. Additionally, individuals may argue that suitable employment opportunities are unavailable to them due to market conditions, lack of qualifications, or other factors beyond their control. Evidence of unsuccessful job searches or limited job prospects can bolster this defense.
Another defense strategy involves addressing underemployment, where individuals may argue that they are currently earning less than their potential due to circumstances like job loss, career changes, or an inability to secure higher-paying work. They may present evidence of efforts to obtain better employment opportunities or demonstrate involuntary underemployment. Furthermore, individuals may contend that they require additional education, training, or certification to enhance their earning capacity, substantiating this claim with evidence of enrollment in educational programs or vocational training courses.
Contact a New Jersey Divorce Attorney Today
If you are currently working through a divorce and are worried about having your income imputed, it is best to secure a legal advocate as soon as you can. Imputed income is calculated based on your earning potential, not your current employment status, and can be an issue. The team at Ziegler Law Group, LLC can help you during this trying time by representing you and your needs in Court. Schedule a free consultation with us today by calling 973-533-1100 or by filling out the online form.
