If you’re planning to seek child support and/or alimony (“spousal maintenance”) in your divorce, you likely know that both spouses’ incomes are key factors in determining how much one spouse owes the other.
Courts consider more than simply current income. They also consider what’s known as “earning ability” or “earning potential.” It’s also sometimes referred to as “imputed income.”
What does New Jersey law instruct courts to consider?
Income imputation is used to describe the process of determining what a person’s earning potential is. For example, when determining child support orders, New Jersey law tells judges to consider things like “educational background, training, employment skills, work experience, custodial responsibility for children including the cost of providing child care and the length of time and cost of each parent to obtain training or experience for appropriate employment.”
Often, an assessment or reassessment of a person’s earning potential comes into play if one spouse accuses the other of intentionally remaining “underemployed” to avoid paying support or to get more support. For example, if they’re a contractor, they may turn down work or not take jobs that are well within their skill set. This may also occur if that person has a source of income they’re not disclosing, which could get them into legal jeopardy.
Why people may not be able to achieve their earning potential
Certainly, there are valid reasons for someone not living up to their earning potential if only factors like education, skills and experience are considered. They may have injuries or health issues that prevent them from working as much as they used to. They may be the sole caregiver for an elderly or disabled relative. There may have been a drastic economic downturn that has affected their employer or their industry as a whole. All those things must also be considered.
Whichever side of the support equation you’re on, if you believe your ex or soon-to-be ex is intentionally earning below their earning potential to dishonestly affect a support order, it’s important to seek legal guidance to help bring your case to the court. If you’re the one being accused of remaining underemployed and/or hiding income, it’s important to show the court that you’re acting in good faith when it comes to seeking and keeping work that is commensurate with your earning potential.