Understanding the financial aspects of a divorce can be difficult in any case, even when the facts of the divorce seem relatively straightforward. Financial matters tend to become much more complex in high net worth divorces, as well as in contentious cases in which one spouse is required to pay alimony and child support. Sometimes a spouse who is required to make support payments will simply quit his or her job in an attempt to avoid making payments or will take a lesser paying job in order to avoid making the amount of support payments that otherwise would be required. In short, when one spouse earns significantly less than his or her earning potential and the current earnings were a voluntary choice, the court may impute income in ordering alimony or child support. Indeed, voluntary underemployment or unemployment can lead the court to impute income.
Imputed income is the amount that the court assigns as the party’s income for purposes of determining spousal support or child support payments. We want to say more about how and why this can happen in a Michigan divorce.
Michigan’s Child Support Manual and Imputed Income
The Michigan Child Support Manual discusses imputed income as potential income. It makes clear that when a parent chooses to be unemployed or underemployed, even though he or she has the ability to make a certain level of income, then the court will consider that earning potential when assigning child support. The potential income imputed by the court should match what that parent’s income would have been if the parent had not chosen to make less. When a court does impute income, it cannot impute an amount that is greater than what the party would have earned if there had not been a reduction in income.
The court cannot calculate the amount of potential income based on a workweek beyond 40 hours per week (i.e., the court cannot count potential overtime pay). The court also cannot impute income if the party decided to stop working a second job or to stop taking overtime pay. To be clear, a reduction in income that results from a decision to stop working overtime shifts cannot result in a court imputing income.
Factors for Deciding Whether to Impute Income
When a court imputes income, it looks at a variety of factors to decide “whether the parent in question has an actual ability to earn and a reasonable likelihood of earning the potential income.” The following factors can be considered, according to the Michigan Child Support Manual:
- The parent’s previous employment experience and employment history;
- Reasons the parent changed employment or was terminated;
- Parent’s education level and job training;
- Parent’s disabilities that could affect his or her ability to work;
- Availability of work for the parent;
- Availability of job opportunities in the parent’s geographic area;
- Typical wage rates for the parent’s job in his or her geographic area;
- Whether the parent has sought appropriate employment in good faith;
- Evidence that the parent would actually be able to earn the imputed income;
- Parent’s personal history;
- Whether the parent’s time with the child has impacted earnings; and
- Whether the parent’s earnings got reduced prior to the divorce.
Contact a Divorce Attorney in Michigan
A dedicated divorce attorney in Michigan can discuss your case with you today if you have questions about support and imputed income. Contact the Law Offices of Michael A. Robbins for more information.