In family law cases, imputed income comes into play when a parent’s income is unclear or a parent leaves their job to avoid paying child support. The court will impute income by assigning a potential earning capacity to that parent, ensuring continued child support payments. This is crucial when calculating child support orders, especially if the custodial parent depends on financial support from the non-custodial parent. If a parent changes their parenting time or alters their work situation, the court may adjust child support payments based on imputed income to protect the child’s best interests. A Baton Rouge child support lawyer can help explain how imputed income affects your case.
Call 225-343-1111 to schedule a consultation with Baton Rouge family law attorneys today.
What is Imputed Income?
Imputed income refers to income attributed to a person that is assigned by a court based on earning capacity based on their skills, education, employment history, and job opportunities, even if they are not currently earning the total amount assigned. Typically, courts will impute income in situations involving an unemployed or underemployed parent or a voluntarily unemployed or underemployed person going through a divorce.
A court will not impute income simply because a parent’s income should be higher or when a parent leaves a bad job to genuinely receive more parenting time or pursue higher education. Imputed income is reserved for cases where a parent is hiding or minimizing taxable income to avoid a court order for financial support, such as child support orders.
A court’s decision to impute income to a parent to ensure fairness between the custodial parent and non-custodial parent.
Child Support Taxable Income
When calculating child support orders, taxable income plays a significant role in determining the amount the custodial or non-custodial parent must pay.
For federal income tax purposes, wages, employee benefits, and income shown on an employee’s pay stub are typically included as taxable income. Taxable income can include earnings from a job, social security, and even fringe benefits or non-cash benefits like a company car. Payments such as expense reimbursement may also be factored in unless they are considered de minimis and not subject to federal tax.
Self-employment income or additional income used for personal use or provided to a spouse may also be evaluated.
Financial support obligations are calculated based on the income attributed to the account of the parent responsible for supporting the children, including all forms of taxed income that the parent is required to report for federal income tax purposes. Understanding what qualifies as taxable income is crucial when a parent chooses not to maintain employment or other circumstances where a parent voluntarily chooses not to earn income or chooses to earn income well below their earning capacity just so they won’t have to pay child support.
Imputed Income: Child Support
In family law cases, imputed income refers to the court assigning an additional income to a parent for the purpose of calculating financial support. This happens when a parent is found to be voluntarily unemployed or choosing not to earn income close to their total earning capacity.
The court will consider the parent’s earning capacity based on factors such as employment history and qualifications rather than their actual wages. This imputed income is then used to determine the proper support amount for the children. Courts do not impute income simply for failing to earn higher wages but based on parents’ potential based on employment history and circumstances.
Our Baton Rouge family law attorneys can help present relevant evidence to ensure a fair amount of imputed income while also considering whether the imputed income will be taxed or how it impacts the parent’s income tax account.
How Does Imputed Income Affect My Tax Return?
Imputed income does not directly affect your tax return because it is not considered taxable income for federal tax purposes. While the court may assign an income amount to determine family law payments, this income is not actually earned, so it will not be reported on your income tax return or subject to those taxes. However, any actual income that is taxed would be included as taxable income on your return.
So, imputed income does not have an impact on the taxes you owe. If you have questions about how imputed income may interact with your tax situation, a family law attorney at our law firm can offer guidance.
How to Calculate Imputed Income for Child Support in Louisiana
When imputing income for those paying (or not paying) child support, the court considers the earning capacity of the parent rather than their current job status. This means that if a parent is voluntarily underemployed or not making reasonable efforts to find employment, the court may assign imputed income based on their earning capacity (what they could realistically earn).
Factors like employment history, qualifications, and the local job market help determine the amount for imputed income under Louisiana Law. The court also looks at whether the parent is making efforts to pursue higher education or new opportunities to maintain employment.
Wages from previous jobs, employee and labor skills, and experience are all taken into account to ensure the support calculation is in the best interests of the children. The goal is to ensure that both parents contribute fairly, even if one parent is unemployed or seeking new employment. If you’re the other parent dealing with a support issue, knowing how imputed income works is critical.
Speak with an experienced family law, divorce attorney, or child custody lawyer in Baton Rouge for more information.
How to Get a Judge to Impute Income for Child Support in Louisiana
A judge may impute income for a support obligation when one of the parents intentionally reduces their income by voluntary unemployment or working at a job that pays well below their earning capacity.
A family court will impute income or assign additional income to a parent in several situations, including:
- Voluntary Underemployment: When a parent is capable of earning more but chooses part-time work or a minimum wage job despite their qualifications.
- Unemployment by Choice: If a parent voluntarily quits their job or refuses to find employment.
- Hiding Income: When there is clear evidence that a parent is hiding income, assets, or other financial resources to reduce their child support obligation.
- Failure to Report Income: If a parent does not accurately report their income or financial situation on their tax return, leading to an unfair support calculation.
How to Prove That a Parent is Hiding Income to Avoid a Child Support Obligation
Proving that a parent is hiding income can be challenging, but it is essential to ensure that support obligations ultimately benefit the child or children. To establish that a parent is intentionally concealing income, you may need to provide the following evidence:
- Bank Statements and Financial Records: Reviewing bank statements, pay stub information, tax returns, and financial records can help identify discrepancies in income reported on the parent’s tax return.
- Employment Records: If you suspect a parent is working under the table or using cash payments to avoid detection of their higher income, collecting evidence is crucial.
- Lifestyle and Expenditures: Discrepancies between a parent’s reported income and their lifestyle and expenditures, such as luxury purchases or vacations, can raise suspicion.
- Private Investigators: Working with a private investigator may be necessary to gather evidence of hidden income or undisclosed assets.
- Social Media Activity: Publicly available social media posts that depict a lavish lifestyle inconsistent with reported monthly income can be used as evidence.
Penalty for Hiding Income for Child Support in Louisiana
In Louisiana, if a parent is caught hiding income to avoid or reduce payments to the custodial parent or the other parent, the court may apply income imputation to calculate what they should be paying.
Imputing income ensures that both parents contribute fairly to the child’s well-being. Hiding income can result in severe penalties, including back payments, fines, or even jail time.
The court will impute income based on the parent’s skills, employment history, and job capacity to protect the child’s financial needs. Attempting to deceive the court can lead to legal consequences beyond the support adjustment.
Examples of Imputed Income in Louisiana
In Louisiana, imputed income is used when a parent is not earning what they can, based on their skills and qualifications.
For example, if a parent voluntarily leaves a well-paying job for lower-paying work or refuses to seek new employment, the court may assign additional income imputation to give a higher income to that parent for the purpose of child support.
The court may also impute income if a parent receives benefits or compensation not reported on taxes as part of their income, such as free housing or bonuses.
Imputing income ensures that both parents contribute fairly to the financial well-being of the children. The custodial parent and the court aim to ensure the child receives adequate support, and assigning imputed income to a parent who is voluntarily underemployed helps achieve that goal, even if the imputed income isn’t taxable.
Child Support When Unemployed in Louisiana
In Louisiana, unemployment does not automatically relieve a parent from their child support obligations. In family law cases where a parent attempts to use underemployment or unemployment to their benefit, the court may still issue a child support order.
The court will consider the circumstances surrounding the parent’s lack of a job and may calculate support based on imputed income. By imputing income, the court ensures that the unemployed or underemployed parent still contributes fairly to the financial needs of their child or children, regardless of actual earnings or financial resources in their bank account. This helps maintain the child’s best interests, ensuring both parents fulfill their responsibilities.
How Baton Rouge Child Support Attorneys Can Help Impute Income for a Nonpaying Parent
Baton Rouge child support attorneys can be instrumental in ensuring imputed income is applied when nonpaying parents are intentionally underemployed or avoiding their child support obligations. By imputing income, the court assigns a fair monthly income based on the parent’s ability to earn, even if they are not currently working or receiving a formal job salary.
Our family law attorneys will gather relevant evidence, such as the parent’s employment history, potential fringe benefits, and any taxable or untaxed benefits they might be receiving. This ensures that the best interests of the children are prioritized.
Whether it’s through reviewing an employer’s records or understanding how a spouse might influence support orders, our family law divorce attorney team can make a strong case for imputed income. This will ultimately benefit the children by ensuring fair financial contributions for child support and custody matters, holding both parents accountable.
Call 225-343-1111 to schedule a consultation and take the first step toward resolving your child support concerns.
