When calculating income for child support or temporary maintenance (alimony), according to the New York Domestic Relations Law and the Family Court Act, the Court may, if the court believes it is appropriate, add in or “impute” income to people. The statutes outline some enumerated items to be considered for imputing income and mentions that other resources can be additionally considered. Assets that are not producing income is one of these enumerated resources. Fringe benefits and “perks” that someone receives as part of their job like for food, housing, cars, memberships, and other benefits, if they are for personal use or if they result in a financial benefit to the party, are mentioned in the statutes as things that can be imputed as income by a court. Funds, services, or benefits received by friends or family can be added in as income for child support or a maintenance calculation under the law.
If a court concludes that someone has diminished their income or assets to try to get around a child support or a “pendente lite” (Latin for while the case is pending) maintenance obligation, a court can impute income for the party’s previous income or resources. This might be, for example, if the court believes someone voluntarily left their jobs, were fired for cause, or chooses not to work full time or at all. Besides past earnings, a court can consider their education and ability to earn. Whether or not the party is diligently applying for employment commensurate with their background, experience, and abilities may be a factor in determining income. A support magistrate or judge can look at what people with comparable educations and backgrounds earn to impute income.
There is of course another side to these cases. The person or lawyer arguing against income being imputed to their client can show that the loss of employment or income was due to no fault of their own like for medical reasons, the economy, or downsizing. If that person proves that the circumstances were out of her or his control, and they have been making diligent attempts to get replacement employment or income, albeit unsuccessfully, then they might convince the court that income should not be added in. Relevant questions might be “Where did you apply for jobs? Who did you talk to? What interviews did you go on? How often would you make applications each week? Did you receive any offers” – and so on. Ultimately, a court needs to weigh each side’s presentation for or against the imputation of income.
Besides just employment income, investment income, disability, social security, pensions, government payouts, retirement benefits and other sources can be added into figuring out income. If self-employed people had deductions from their income for depreciation, (besides straight line depreciation), that may be added back in to income. Also, if self-employed people deducted travel or entertaining expenses from their incomes, if these items diminished personal expenses, they too can be added back into income for child support or a temporary maintenance calculation.
Off the books or unreported income can be a source of debate in child support or maintenance cases. Lifestyle might be used to substantiate income. For example, someone might claim poverty yet drives top of the line cars, wears the finest clothes, takes vacations and other luxuries that their reported incomes would not support. I saw a support magistrate impute income to a party, in part, based on the amount of money spent on cigarettes and alcohol by his own admission. Bank statements can be scrutinized to ensure that tax returns are accurate. Some people hire private investigators or experts to perform forensic accounting, a stream of income analysis or other methods to help determine or prove income.
Arguing for or against the imputation of income is a challenging area of matrimonial and family law best left for experienced attorneys. If you have questions about income imputation, child support, maintenance or other matrimonial or family law issues feel free to contact us about your free initial consultation. Other blog entries and pages of our website are a good source of information as well. Let us know if we can help. We would appreciate hearing from you.