Demystifying the imputation of income.

“[A]ny party is free to retire, take a vow of poverty, write poetry, or hawk roses in an airport, if he or she sees fit. The only limit is discontinuance of the financial aid the former spouse requires. The reason for this is that the duty of self-fulfillment must give way to the pre-existing duty which runs between spouses who have been in a marriage which has failed.” Deegan v. Deegan, 254 N.J. Super. 350, 358-59.

In certain circumstances it may be inequitable to a party to use actual income where, for example, the supporting party is, in bad faith, unemployed or underemployed. The fact that a court cannot actually order someone to work more or more diligently does not mean that it cannot fix one’s income at a level more commensurate with one’s work experience, educational background, prior earning history, and support responsibilities, to name just a few.

If the court finds that either parent is, without just cause, voluntarily underemployed or unemployed, it shall impute income to that parent according to the following priorities:
• Parent’s potential employment and earning capacity using the parent’s work history, occupational qualifications, educational background and prevailing job opportunities in the region; Pressler, Current N.J. Court Rules, Appendix 1X-A
¶ 12;
• If potential earnings cannot be determined, income may be imputed based on the parent’s most recent wage or benefit record (a minimum of two calendar quarters) on file with the New Jersey Department of Labor; Id.

• If a NJDOL wage or benefit record is not available, income may be imputed based on full-time employment at the New Jersey minimum wage.

The court must determine that the payor is, without cause, voluntarily underemployed in order to impute income. Appendix IX-A to Rule 5:6A “Considerations in the Use of the Child Support Guidelines” provides specific factors for the court to consider in determining whether income should be imputed to a parent, and the amount of such income. They are as follows:
• What the employment status and earning capacity of that parent would have been if the family had remained intact;
• The reason and intent for the voluntary underemployment or unemployment;
• The availability of other assets that may be used to pay support; and

• The ages of any children in the parent’s household and child-care alternatives.

A difficult area of income imputation involves the parent who stays at home to care for minor children rather than obtaining employment outside the home. Courts have grappled with the question of whether being a full-time parent and caregiver is different in quality from voluntary employment. In Thomas v. Thomas, the court refused to impute income to a noncustodial parent who was staying at home to care for the two young children of her new marriage.

“Here, defendant is not engaged in the job market because she is fulfilling a unique and important role in providing a nurturing environment for her extremely young children. In this regard, it is important to note that plaintiff is not unemployed. She is employed on a full-time basis as a care giver to her young children. This employment is, however, not compensated momentarily. Moreover, plaintiff’s decision to remain at home with her two-month old and three-year old son is entitled to great deference. While the costs and benefits of such a decision to stay at home may be fairly debated, no court should overrule a parent’s decision in that regard or punish the decision by the imposition of a monetary award.” Thomas v. Thomas, 248 N.J. Super. 33, 36 (Ch. Div. 1991).

In 1992, the Appellate division directed courts to view this issue on a case-by-case basis, thus eliminating any pro se rule.

In some cases, a party persists in employment that arguably leaves him or her underemployed. This problem often arises when a payor has recently switched employment. As was the case in Lynn v. Lynn, 165 N.J. Super. 328. The Appellate Division refused to reduce the doctor-husband’s child support obligations where he voluntarily reduced his income from $110,000.00 per year to $17,000.00 per year by taking a medical position in a different residency field. The court’s analysis is to be guided by the following, not exhaustive, factors relevant to the reasonableness and relative advantages of a career change:
1. the reasons for the career change;
2. disparity between prior and present earnings;
3. efforts to find work at comparable play;
4. the extent to which the new career draws or builds upon education, skills and experience;
5. the availability of work;
6. the extent to which the new career offers opportunities for enhanced earnings in the future;
7. age and health; and

8. the former spouse’s need for support.

Imputation of income is a discretionary matter not capable of precise or exact determination but rather requiring a trial judge to realistically appraise capacity to earn and job availability.