When determining whether and to what extent alimony and child support should be paid, the income of both spouses is a significant factor in fixing the support amount. In addition to the parties’ actual income, courts are also permitted to consider either parties’ “capacity to earn” when setting support awards. This is called imputing income. After all, if either party was simply permitted to take a vow of poverty upon getting divorced, it could lead to wildly inequitable support awards. New Jersey courts have explained that the right of self-fulfillment must give way to the pre-existing duty of support between parties.
Imputation involves a two-part analysis: First, the court must find that the party is voluntarily unemployed or underemployed. Second, and only if the first part has been met, the court may impute income based on the party’s “capacity to earn.” New Jersey courts have recognized that there is no exact science or formula to this analysis. Instead, it requires a court to “realistically appraise capacity to earn and job availability” under the circumstances of each case. The party seeking to avoid imputation carries the burden of showing that he or she is employed at his or her expected capacity, or that such capacity has been diminished.
Factors for Consideration
In determining whether a party’s unemployment or underemployed is justified, a court may look to factors such as a lack of work in one’s field, health of the parties, disability, the need to care for a child, loss of professional license, incarceration, and even early retirement, when such plans were previously discussed between the spouses.
In contrast, the desire for a less demanding lifestyle or career change, are afforded less weight. For example, in one case, a court found that a spouse was not voluntarily underemployed after he lost his job of 17 years and was only able to find another job at roughly half his original salary and reduced benefits. Conversely, in another case, a court imputed income to a spouse who earned $111,000 as a computer specialist, but then lost his job and became a massage therapist, earning just $300 a week. The court explained that when a spouse takes a new job that does not draw on the spouse’s skills and prior experience, he or she must explain the choice and demonstrate efforts to find work at a similar pay rate. Put simply, “[i]t is not enough to show some job, any job.”
How is Imputed Income Determined?
Once the court determines that imputation is proper, it must still fix an imputed income amount based on the party’s capacity to earn. For this determination, a court is permitted to consider any evidence that allows the court to “realistically appraise” the earnings potential of the party, including testimony of the parties, prior earnings and tax returns, the party’s Case Information Statement, prevailing wage data published by the New Jersey Department of Labor and Workforce Development, and testimony of employability/vocational experts.
Identifying situations in which imputation might be applicable, and assembling the resources necessary to assert or defend an imputation claim can have a significant impact on both the direction of settlement negotiations and the amount and duration of a final support award. As a result, assessing both parties’ income should be a factor assessed at an early stage in a divorce or support proceeding, to avoid potential surprises by the opposing party at a later stage in negotiations. Contact Steven M. Cytryn, Esq., an experienced Central New Jersey divorce attorney, today, for more information on the imputation of income, and to discuss how it might impact your case.
Disclaimer – The information provided herein is for informational purposes only. None of the information provided herein should be considered legal advice and does not create a lawyer-client relationship. The information provided herein is not a replacement or substitute for independent legal advice and counsel, and should not be relied on for any purpose. The law is subject to change and interpretation, and every case presents its own unique set of facts and circumstances that must be considered and weighed before any legal action is taken.
