Imputing Income

In domestic relations proceedings, imputing income is a term used to describe the process of assigning a certain amount of income to a parent or spouse for the purpose of calculating child support or maintenance. While traditionally, a parties’ actual income should be utilized for these calculations, there are occasions where imputing income will be necessary. Imputing income can ensure that both parties are contributing reasonably to the financial support of any children or to a former spouse entitled to maintenance. 

The typical process for determining the amount of income that will be assigned to a party starts with exchanging financial documents. Parties involved in a divorce or parenting matters are required to provide both truthful and complete financial information to the other party and to the court. This information is generally provided through financial affidavits with supporting documents, which will provide information about a parties’ income. Additional discovery can be requested in order to receive more information if necessary. For more information on discovery read our article located here. 

After the review of a parties’ financial information, the issue may arise as to whether there is an argument to impute income. Imputing income generally is utilized when it is believed that a party is voluntarily unemployed or underemployed. For the purpose of imputing income in Illinois, a court must find one of the following: (1) the payor has become voluntarily unemployed, (2) the payor is attempting to evade a support obligation, or (3) the payor has unreasonably failed to take advantage of an employment opportunity. In re the Marriage of Blume, 2016 IL App (3d) 140276 at 30. If a parent is voluntarily unemployed or underemployed, child support and maintenance will be calculated based on a determination of potential income. A determination of potential income is made by determining employment potential and probable earnings level based on the obligor’s work history, occupational qualifications, prevailing job opportunities, the ownership by a parent of a substantial non-income producing asset, and earnings levels in the community. 750 ILCS 5/505(a)(3.2).

A court may first order that one party maintain a “job diary” demonstrating their attempts at obtaining employment. A court may order this if an individual is unemployed or if an individual is employed part time and the court believes they have the ability to be employed full time. If an individual is ordered to maintain a job diary and fails to adequately do so this can support an argument for imputation of income. Once the parties’ agree to an amount, or the court has determined the amount of income to be imputed, that figure will be used to calculate the parent’s child support obligation or maintenance obligation where applicable. 

Whether income should be imputed and what amount should be imputed is case specific. For example, if a parent has a college degree and a history of earning a certain salary, but is currently unemployed, the court may impute income based on their past earnings and current job opportunities. Similarly, if a parent is working part-time when they have the ability to work full-time, the court may impute income by multiplying their part-time income to what it would be on a full time basis. This may also occur if one party has stayed at home during the marriage, however, has the ability to earn income due to past employment or education levels. It is unlikely that the parent’s income will be set at $0 and more likely that at the very least minimum wage will be imputed.  However, the past history of employment will matter. For example, if one party has historically worked for a non-profit where they could be making more money in the private sector, it will be less likely that income will be imputed in this situation as that person is not likely to be considered “voluntarily underemployed” if they have historically earned a lower income throughout the relationship than their potential could allow.

Another instance where income may be imputed to a party is when it is difficult to determine what a party is actually earning. “[W]hen a party’s current income is difficult to ascertain or uncertain, a court may consider [the party’s] past earnings.” In re Marriage of Gabriel, 2020 IL App (1st) 182710 (Citations Omitted). This most frequently comes up when one party is paid in cash or when a party owns a business. In these circumstances, formal discovery is more common as it will require the production of documentations for more accounts and for longer time periods. Common documents that would be requested are bank statements and zelle/venmo records, and business accounts for the last few years. Furthermore, if a party has an inconsistent income, an average of the last three or more years of income may be used. 

Ultimately, if an agreement cannot be reached, the decision whether to impute income and what amount to impute is up to the judge presiding over the case. Imputation of income is very case specific. The Law Office of Erin M. Wilson LLC can talk through your specific facts and circumstances and provide guidance accordingly. Contact The Law Office of Erin M. Wilson  LLC today to schedule a consultation at 312-767-4220.

NOTICE: This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.