Imputation of income is an important legal concept for anyone who pays alimony to understand. If a former spouse who pays alimony (“payor spouse”) becomes unemployed, that payor spouse’s request to terminate, suspend, or reduce his or her alimony payments could be denied by the Court if the Court imputes income to that payor spouse. When a Court is deciding whether to impute income to a payor spouse, it first must determine whether the payor spouse is voluntarily unemployed. A payor spouse may be considered voluntarily unemployed if his or her unemployment is a result of the failure to use his or her best efforts to find employment that is equivalent in income to the former position which he or she held. Using one’s best efforts does not include retraining, but only finding a job for which one was already qualified.
If the Court concludes that the payor spouse is voluntarily unemployed, it then must determine the employment potential and probable earnings level of the unemployed payor spouse. The employment potential and probable earnings of a voluntarily unemployed payor spouse must be determined based upon the following factors, unless the payor spouse has a physical or mental incapacity preventing him or her from working:
• Payor spouse’s recent work history.
• Payor spouse’s occupational qualifications.
• The prevailing earnings in the community for the work for which payor spouse is qualified.
If there is insufficient evidence to determine the amount of income to impute based on the above factors, the court can rely on the payor spouse’s historical earnings records. However, the court may not impute income based on income records more than 5 years old at the time of the hearing or trial at which imputation is sought.
In cases in which the payor spouse fails to participate in an alimony proceeding, such as an enforcement action by the payee spouse, or fails to supply adequate financial information in such a proceeding, the court must automatically impute income to the payor spouse and there is a rebuttable presumption that the payor spouse has income equivalent to the median income of year-round, full-time workers as derived from current population reports or replacement reports published by the United States Bureau of the Census.
However, the spouse receiving the alimony (“payee spouse”) has the initial burden of proof to establish that the payor spouse is voluntarily unemployed and further establish the amount of income to be imputed.