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Imputing income for underemployed parents

Not long after you and your spouse separated, he was laid off from his job. Now that you’ve filed for divorce, he seems determined to remain unemployed, although he insists that he is actively looking for the “right” job.

This scenario happens a lot. To reduce the amount of spousal or child support they might have to pay, many people deliberately remain unemployed or underemployed. They will do things like:

  • Intentionally quit their jobs and take another, lower-paying one
  • Claim to be out of work
  • Refrain from disclosing the value of employment benefits that increase their disposable income, such as a company car or paid vacations

Some of them even work cash-only jobs to avoid having traceable income. New York courts, however, have come up with a strategy for dealing with this situation. It’s called imputation of income.

How does imputation of income work?

Courts impute income when they have reason to believe that the party in question either earns more than they are claiming or are capable of earning more. In the latter circumstance, think about a skilled professional like an engineer or accountant working in retail. These people are minimizing their income (at least on paper) to get the lowest possible child or spousal support order.

To prevent such a deliberate shirking of responsibility, New York judges determine if the spouse who allegedly lost their job did so through no fault of their own or whether they quit or were fired for misconduct instead. If they find the latter to be the case, then the court will calculate support amounts using their previous income as the basis. They will also take this approach if the spouse deliberately leaves their job for another with a significantly lower salary or cuts their hours from full-time to part-time without a reasonable explanation.

To impute income, the court will carry out a “lifestyle analysis,” which compares the person’s current lifestyle or standard of living to the income they report in their Statement of Net Worth. This analysis usually examines:

  • Tax returns
  • Expenses (for example, a person who claims to earn $40,000 a year shouldn’t be able to afford a BMW and a private yacht unless they have extra money coming in)
  • Unusual cash transfers

These days, it is not unusual for a person’s social media posts to be held against them. If they claim to be unemployed only to post photos of themselves posing with co-workers at a job site, then the court will ignore their cries of poverty and award support to the other spouse based on what the person should be making given their background and abilities.

When you suspect that your spouse is concealing income or remaining underemployed to receive a lower support order, be sure to let your New York personal injury attorney know. Your attorney will work with the judge to ensure that this person’s deceit doesn’t deprive you of the funds that you and your family need. Jayson Lutzky is a Bronx, NY divorce lawyer who has handled thousands of divorce cases–both contested and uncontested–over the past 35 years. He also handles family court matters. To set up a free in-person initial consultation, call his office at 718-329-9500 or visit www.MyNewYorkCityLawyer.com/Divorce to learn more.

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