What is Imputed Income in a New Jersey Divorce?

One of the aspects considered during a divorce case is the financial standing of both spouses. The court looks at how much money each party makes to ensure a fair distribution of financial obligations. In other cases, judges may also consider what a spouse could make and “impute” that income if they believe the person is not living up to their total earning capacity. It is essential to understand what imputed income is and its implications in New Jersey divorce cases.

What is Imputed Income?

Imputed income is income that the court assigns to a spouse, even if they are not currently earning that income. The decision to impute income is based on what they could earn under reasonable circumstances. The court holds a spouse financially accountable if it believes they are underreporting income or intentionally earning less to avoid support obligations.

The Purpose of Imputed Income in a New Jersey Divorce

The primary purpose of imputing income is to ensure that each spouse’s support and contributions are fair. It prevents one party from dodging responsibilities like child support or alimony by claiming low or no income. For instance, if one spouse intentionally chooses a job that pays $40,000 but can earn more, the court may impute an additional amount. The imputed figure then becomes the baseline for calculating financial obligations.

Imputed income directly impacts:

  • Child support: Imputed income ensures that children receive appropriate child support, even if one parent claims to be unemployed or underemployed.
  • Spousal support: Imputed income also impacts the amount of spousal support awarded in divorce.
  • Property Division: The division of property, such as marital assets and debt, may also be based on imputed rather than actual income.

Factors Courts Consider When Imputing Income

New Jersey courts consider several factors before determining whether to impute income and how much should be assigned. These include the following:

  • Work history and employment: The court reviews past employment, including the types of jobs a person had and the salary earned, to determine their earning potential. For instance, if you left a job in advertising, the court may assign you an income based on prior salary, what current employees in the same position are making, or if unemployed long-term, the state’s minimum wage for 40 hours’ weekly
  • Education and skills: A spouse’s educational background and skillset may also be used to determine their ability to find employment
  • Job market: The court also considers the availability of job opportunities in the local market to determine if a spouse can reasonably secure a job considering their qualification.
  • Health: If a spouse has health issues that could limit their ability to work, these issues may influence the court’s decision.
  • Efforts to find employment: The courts also consider whether a party has genuinely tried to find a job or increase their income.
  • Passive income potential: If a spouse has passive assets that could otherwise generate income, such as money in a savings account, the court may consider the potential earnings from those assets.

You can avoid imputed income if you demonstrate you are involuntarily unemployed, underemployed, or actively seeking employment. An experienced divorce lawyer can help you navigate the complexities of imputed income.

Contact a New Jersey Divorce Lawyer 

If you are going through a divorce, contact our experienced New Jersey family law attorney at The Trabosh Law firm to protect your financial rights.

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