Child Support: Imputation of Income
The strict policy in California is that each parent’s first and principal obligation is to support their minor children relevant to each parent’s circumstances and station in life. To calculate a child support order, the Court requires, among other things, each parent to disclose their annual gross income.
What happens when one parent alleges that the other is either underemployed or has “other money” that should be considered when a Judge calculates child support? One of the most common situations involves considering a parent’s earning capacity “in lieu of” their reported income or lack of income.
The Court has discretion to “impute” income consistent with a parent’s actual earning ability so long as considering that parent’s earning capacity is in the best interest of the children—i.e., the children’s overall welfare and developmental needs and time they get to spend with that parent.
Depending of the circumstances, the Court may make findings on a parent’s earning capacity by analyzing their ability and opportunity to work (often with the assistance of a vocational evaluation), their income-producing assets (rental property income, investment income, etc.), and even a reasonable rate of return on non-income-producing investment assets (asset liquidation, real estate, start-up business ventures, etc.). The Court might even add earning capacity to unearned income (disability income, trust income, royalties, other distributions).
Again, it is important to note that the circumstances of each family will weigh heavily on a Judge’s decision and they may choose not to impute income in one case, while imputing income in another with very similar financial circumstances but different family dynamics. This is because the Court’s discretion is qualified by considering “the best interest of the children.”
No parent may avoid their obligation to support their child and the law provides many avenues for parents to obtain appropriate support orders, so long as the Court receives enough supporting information to use its discretion appropriately.
It is important to know your rights, responsibilities, and options regarding child support. Our family law team at Naimish & Lewis can advise you on this and other family law matters. To schedule an initial consultation with an attorney at our firm, please contact us.