What Is Imputation of Income and what Does It Have to Do with Utah Divorce?
When you think of the word “income,” you probably think about actual money you earn from a job.
That makes sense, and that’s what income means most of the time.
Sometimes in Utah divorces, however, income isn’t income because it’s imputed income.
What Is Imputed Income?
Imputed income is income someone should earn but doesn’t.
Let’s use an example to explain things.
Husband and Wife are getting divorced. Four years ago, Wife worked for a bank and made $50,000 per year. She quit her job to stay home with the baby, so she hasn’t work for four years. The court could impute Wife income based on the idea she could go back to work and make $50,000 per year since she did it before. So, $50,000 would be Wife’s imputed income.
That’s the essence of imputed income.
Why Do Courts Impute Income?
Courts impute income for three main reasons:
- Children need support from both parents, so the court isn’t going to allow one parent to put an undue burden on the other parent by working less or taking a cruddy, lower-paying job.
- Alimony is based on true need, not on the luxury of not working or working less than reasonably possible.
- You can’t get out of paying support and alimony because you decide you want to work less or take a lower paying job.
When Do Courts Impute Income?
Courts will impute income to a person when the court believes a person is voluntarily underemployed.
Whether people like it or not, everyone has to work full-time after a divorce. Dads have to work. Moms have to work. Even moms who haven’t worked for years have to work.
You can count on working forty hours per week if you’re getting divorced.
So, if a husband doesn’t want to forty hours per week, but prefers to work twenty-five, the court will impute him income based on what he would make if he worked forty hours per week.
On the other hand, if a wife doesn’t want to go back to work because she would prefer to stay at home with the kids, the court will impute her at the wage she would make if she were to work a full-time job.
When Do Courts not Impute Income?
In my experience, courts are reluctant to impute income in Utah divorce when:
- Working a forty-hour-week doesn’t make sense because income from the job would be so low it wouldn’t cover daycare and other expenses.
- The person to be imputed income is disabled or otherwise unable to work (e.g., does not have a U.S. work permit).
What Income Do Courts Usually Impute?
I’d say more than 80% of the time, courts will impute people at minimum wage — i.e., $1257 per month in Utah.
Why minimum wage and not more?
Minimum wage is the most commonly imputed income for a simple reason: people who are imputed income in Utah divorces usually haven’t been working for a while.
For example, lots of stay-at-home moms are imputed minimum wage because they’ve been stay-at-home moms for sevens or ten years, and they simply don’t have many job force skills that would allow them to make much money.
By contrast, if you have a job and make more than minimum wage, which is most people getting divorced, then there is no need for imputing income because there is an actual income on which you can based child support and alimony.
How Can You Prove Someone Is Voluntarily Underemployed?
If imputing income is based on someone being voluntarily underemployed, how do you go about proving that?
Here are the most common ways:
- Show that what the person makes now is significantly lower than what they made in the recent past.
If a husband had a $100,000 job, then quit at the beginning of the divorce and took a $50,000 year job, it’s pretty likely he’s underemployed.
Not every situation is as clear cut as the example above, but you get the general idea.
- Show there is no disability that would keep the person from making more money.
We encounter many situations in which someone says they’re injured or disabled and can’t make what they should make or used to make. Problem is they have no diagnosed injury or disability.
What we do in situations like this is to gather evidence demonstrating they are not injured or disabled, which means they are free to make more money.
- Hire an expert to show that the person can make much more money than they are making now.
Perhaps unsurprisingly, people going through divorce will minimize their skills and experience and make less money than they could, all in an attempt to pay less in child support and alimony — or to receive more child support and alimony.
When there is a real question about how much someone can make based on their work history, education, and job skills, we hire an expert to make a determination regarding how much money someone can and should make.
This expert is called a vocational evaluator, and can be invaluable depending on the situation.
