Sometimes when considering child or spousal support, it might be more appropriate to base the support amount on a spouse’s earning capacity rather than their actual income. If this is done, it’s referred to as “imputing income” to the spouse. The implication of course is that the earning capacity is greater than the spouse’s current income. This could apply to one spouse or to both of them.
What does California law say about imputing income?
Here are some of the key points:
- Imputed income would only take the place of earned income. If a spouse also has unearned income (such as government benefits or interest from investments), the imputed income would be added to the unearned income. It is possible to impute passive income from assets.
- To impute income to an unemployed or underemployed spouse, that spouse must have the ability to work and an opportunity to work.
- A spouse’s ability to work would take into account such factors as age, occupation, skills, education, health, background, work experience and qualifications.
- A spouse has the opportunity to work if there is a reasonable likelihood that the spouse could, with reasonable effort, apply his/her education, training and skills to produce income.
- If a spouse is unwilling to work, despite having the ability and opportunity to do so, earning capacity may be imputed.
- The figures for imputing income must have some tangible, realistic foundation.
- Earning capacity should normally be based on an objectively reasonable work regimen, and not on an extraordinary work regimen.
- As regards child support, a spouse’s motivation for having reduced income may be relevant, if for example a reduced workload allows the spouse to provide more effective parenting.
- As regards child support, a court may not impute earning capacity to a parent unless it is in the best interests of the child(ren). Generally, the “best interests” issue arises when there are young child(ren) and one parent stops or reduces working to stay home with the children.
A Court Imputing Income
If a court has to decide whether and how much income to impute for a voluntarily unemployed or underemployed spouse, it will take into account the legal points above. The court will assess whether the spouse has made a good-faith effort to find suitable employment commensurate with their education, skills, and job availability. The spouse’s historical earnings, age and health would be taken into account.
Evidence of actual earning capacity would help the court determine an amount of imputed income. This may involve expert testimony. The court would have the aim of coming up with a realistic and fair estimate of what the spouse could earn if he/she were working to their full capacity.
