Imputation of income
One of the most important and most difficult aspects of determining the final outcome of a dissolution of marriage (divorce) in the State of Florida is deciding on the income allotted to each spouse. This amount, will of course, determine how much spousal support (alimony) will be paid/received and, if minor children are involved, how much child support will be paid/received. Both parties are subject to the scrutiny of the legal guidelines for determining income found in Florida Family Law Statute 61.30 and include imputed income when either party is self-employed as well as imputed income when either party can be proven to have intentionally lowered their income by being unemployed or underemployed without justifiable cause. According to the online law dictionary the definition of imputed income is “An income level assigned to an individual that is greater than the individual’s actual earnings.”
To impute or calculate income when self employed one must include actual money earned, bonuses received, and place a monetary or income value on perks such as free rent when using the home for office space, and/or the cost of vehicles provided by the business which are also used for personal as well as business purposes. Cell phones, entertainment, trips, and restaurant meals can also be included as income if they were subject in any way to personal use. Another example of self employed imputed income would be the cost of a paid vacation in exchange for repairs made on a customer’s yacht. To learn more on this subject refer to Attorney Gisondo’s blog “All About a Self Employed Spouse and How to Impute Income.”
When it comes to calculating income for either party when not self-employed, money earned in wages, bonuses, perks such as trips, vehicles, expense accounts, and any items which add to the employed person’s IRS declarations must be equated into dollar and cents income. Cost to operate or maintain required assets such as a car for business purposes will be deducted from the total income. Here is where an experienced Family Law attorney will be needed to help navigate the many twists and turns of what is counted as income and what is not. Sometimes a forensic accountant will utilized.
While it would be helpful if each party would honestly report their income, in truth this does not always happen. In fact, there are many instances when one party or the other or even both will voluntarily create a situation which is not truly indicative of their income or income potential. This is done with the hope of lessening child or spousal support or of increasing the need to receive a larger amount. If it can be proven this is the case, a judge will often impute or include in a person’s income an amount equal to the value of what a person could or should be earning to help contribute to the support of their spouse and/or minor children. The imputed income of working 40 hours a week at minimum wage is sometimes used as the calculating amount, but this can be higher or lower depending on an individual’s circumstance.
For example: A party has, for several years, been earning an income of $165,000 a year and about the time the divorce petition was filed, took a different job at $35,00 a year. No particular reason can be found such as health issues or job layoffs, that required a job change. In this case, a judge will likely “impute” or place a value on the decreased wages and add that amount to the income of the party in question. This will mean when spousal support or child support is calculated, the amount owing will include the fact the party paying will be adjudicated an amount equal to what would be expected when the paying party was earning $65,000 a year. Additionally, if a party is underemployed, in other words, working at a job, say as a salesperson, when they have a degree in teaching or engineering, a judge can encourage a party to use their education and/or previous experience to earn an “imputed” amount on which spousal support and/or child support will be figured. To find out more about voluntary underemployment read Attorney Gisondo’s blog “What is voluntary underemployment?” If a party is completely unemployed a Judge may order them to find a job using their skills and education and “impute” an income of anticipation when determining spousal or child support.
While imputing income is commonly done, based on the guidelines in Florida Statute 61.30 there are also guidelines for extenuating circumstances a Judge will take into consideration before imputation of income occurs. These circumstances can include recent job layoff, health issues affecting what kinds of employment are possible, availability of child care, ages of children, access to reasonable transportation, job availability in party’s skill area and educational level, and the fact a party has earnestly been seeking employment but has been unable, for some time, to find a suitable job.
Should you have further questions regarding imputed income and live in Palm Beach, Martin, St. Lucie, Miami-Dade, Broward, Orange or Hillsborough county in Florida, or Washington DC, attorney Gisondo offers a free, initial, in-office consultation where he will meet with you personally to answer questions and show you how he can help. For the convenience of new clients, in addition to weekdays, Saturday hours from 8:30 am to 1:00 pm are offered. Call his office at (561) 530-4568 for an appointment.