How New Jersey Courts Address Imputable Income

June 21, 2024

Imputing income to a spouse under New Jersey family law means a judge believes a spouse or parent can earn more income or is not reporting their true income from all sources. The judge sets an income for the payor which may be higher than the actual income they report on their taxes. 

Imputation of income applies in situations where the court must decide the amount of child and spousal support. Since these amounts are dependent on the income of the payor, the court must determine the payor’s income accurately and fairly. Sometimes that requires imputing income to that spouse. 

Common Ways Income May Be Questioned 

Unfortunately, in some situations when spouses or parents separate, one spouse may decide to stop working so they do not have to pay child or spousal support. 

If this is suspected, a judge will take appropriate action depending on the circumstances of the lack of income or if income is being falsified. Common examples include: 

  • A parent staying at home to care of children but the children are already going to school and do not need full-time care 
  • A parent working part-time instead of full-time when they can work full-time 
  • A parent being underemployed, meaning not having employment that reflects their experience or education  
  • A parent living in a country where they do not have to, or pay much lower taxes 
  • People who own businesses and write off their personal expenses as business expenses through their business 
  • People who do not report income, such as rental income or cash income 

Consequences of Imputing Income in New Jersey 

Courts have broad discretion to impute income to a spouse, and it commonly occurs in many circumstances. For example, it could be considered intentional under-employment or unemployment, exemption from paying taxes, or applying for residence in a country with lower effective income tax rates. 

Additionally, courts may consider imputing income to a spouse if diversion of income would affect the child support payable or failure to provide information about their income. Others could be imputed if: 

  • Unreasonable utilization of property to generate income 
  • Unreasonable deduction of expenses from income 
  • Derivation of income from dividends, capital gains or other sources taxed at a lower rate 
  • And/or status as a beneficiary under a trust. 

The New Jersey courts have made clear that where a parent or spouse is otherwise capable of working, they can still be imputed at least a full-time, minimum-wage income—in addition to any other income they might otherwise earn. 

By Alexandra “Lexie” Rigden

Alexandra “Lexie” Rigden understands that family law clients face unique challenges mentally, emotionally, and financially. Rigden, Lieberman & Mignogna, P.A. handles all stages of family law litigation, including trials, emergency court motions, as well as pre and post judgment applications. Every case is different, and Lexie Rigden & Ronald G. Lieberman will work to achieve the best outcome for clients whether it involves litigation or settlement. Request a consultation to discuss your case further.

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Gillian
Divorce & Restraining Order
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Gillian
Divorce & Restraining Order
Lexie has been my attorney since 2018. I retained her when I filed for divorce and again when I needed to obtain a restraining order. She is the best of the best. She is professional, honest, and thorough. I would highly recommend her.
February 15, 2022

Gillian
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Anonymous "J"
Do yourself a favor and hire Alexandra
Alexandra came as a recommendation from an attorney friend and she was spot on. Alexandra kept me informed through every step of the process during such a difficult time in my life. She explained things in detail and always had my best interest in mind, even when I may not have realized it. As my title says, do yourself a favor and hire Alexandra.
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Ryan D.
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Ryan D.
True 5 star Lawyer
Alexandra is by far the best lawyer I retained. She did not waste anytime with me or try and drag out the situation for more money. Straight and to the point. Alexandra knows the facts that count for your case and is prepared and ready to fight every inch for you. She also is passionate and listens to you in completely so she can better understand what you are going through. I absolutely recommend Alexandra Kardon Rigden for family law or a DV case.
May 5, 2022

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