In some divorce cases it can be hard to properly determine a person's income for purposes of calculating alimony or child support. This could be due to the manner of the person's work or where they work; such as working for the family business, being self-employed, working on a "cash" basis or seasonal employment. It can also be due to someone quitting a job, refusing to get a job or refusing to go back to work. The courts and the Michigan legislature have determined that they do not want an individual to avoid paying support, paying too little support or too much support because of this situation. Therefore, the courts will impute income to a party.
What is Imputation of Income in a Divorce?
Imputation is where the court determines an income to use for a divorcing spouse when calculating alimony or child support regardless of the spouse's actual income or what the spouse's tax returns may show. When imputing income, the trial court must consider the relevant factors to determine whether a parent has the actual ability and reasonable likelihood to earn the potential income, including: (1) prior employment experience; (2) education level and special skills or training; (3) physical and mental disabilities; (4) availability for work; (5) availability of opportunities to work in the local area; (6) the prevailing wage and hours available in the local area; (7) the party's diligence in seeking employment; (8) evidence the parent is able to earn the imputed income; (9) personal history, including his or her criminal record; (10) the presence of the parties' children in the home; and (11) whether there has been a significant reduction of income before the complaint or motion for modification.
The recent case of Urka v Urka, unpublished Michigan Court of Appeals case no. 343302, provides an example of where the court imputed income. In that case, the father worked on the family farm but claimed the family did not pay him anything for his labor and that he had little or no income as a result. The court referred this issue to the Friend of the Court (FOC) for an investigation regarding the proper income to impute to him. The FOC recommended that the defendant's imputed full time employment be calculated based upon the Bureau of Labor Statistics Occupational Handbook farm manager income of $66,000 (this is a very useful source of information when seeking to impute income). The court found that the work he performed was consistent with that of a farm manager which is defined as a person that operates establishments that produce crops, livestock and or/dairy products. It imputed the $66,000 annual income to him, he appealed but the court of appeals affirmed the trial court.
If you are considering divorce or are concerned that your spouse is considering filing for divorce, please do not hesitate to schedule a consultation with a Michigan family law lawyer by clicking the link or calling (248) 608-4123.