Child Support: Imputing Income

When breakups and divorces occur, it can be one of the most difficult things a person and/or couple can go through. The separation can be simplified in a sense, if there are no children involved. When children are involved, the separation can be a bit less amicable. In this time parents can choose to spite each other in terms of child support because when the splitting couple has a child or children together, the non-custodial parent will still be involved in their life.

North Carolina Law puts most of the emphasis on the non-custodial parent because the child or children primarily lives with the custodial parent. There are a number of ways a parent can attempt to spite the other person by withholding child support. These ways include: deliberate loss of employment; falsifying time sheets to show less hours worked; and not working or seeking a job at all. The best thing to do for parents in this situation is to have an agreement in place as to what child support will be paid for the amount of time needed. If this is not done, a court will have to determine how much child support will be paid from the non-custodial parent to the custodial (live in) parent. According to North Carolina Family Law §10.9, in addition to gross income, which is generally used to calculate child support, the court may use earning capacity or potential income in cases where a parent is voluntarily employed or underemployed.

The courts will elect to "impute income" if and only if it can be determined that the non-custodial parent deliberately attempted to falsify his income or purposely neglected the obligation to provide child support. The key is bad faith. When a parent acts fraudulently in an effort to suppress income the court will react accordingly. In the case of State v. Williams, 179 N.C. App. 838, the court ruled that the father's imputed income was in error because they calculated it from 18 months prior to the child support hearing, and there was no finding that the father deliberately depressed his income. The award cannot be based on prior income and there must be a finding of bad faith on the parent's actions in regards to pay the support.

There is always the chance of error when it is left to the courts to impute income. For instance, if the parent is self-employed and reports a loss of income, that income has to be factored into the computation of gross income. It is important to know that imputing income is not the same as totaling income. In the case of Burnett v. Wheeler, 128 N.C. App. 174, the case was appealed based on the defendant's belief that the court improperly imputed income to his detriment. The court concluded that they totaled his income instead of imputing it after calculating all sources for gross income. There had been no finding of bad faith efforts to state proper income in terms of child support. The court further concluded that there was not any calculation for capacity to earn income thus finding that the judgment was not a result of imputed income.

If it can be proven that a parent knowingly disregarded the obligation to provide payment or their deliberate actions resulted in a loss of income in terms of child support the court could move to impute income. In an outlier case, Metz v. Metz, 711 S.E.2d 737, the defendant lost employment as a result of his voluntary actions and unreasonable behavior with his children. The court ruled that since these were the defendant's own actions and that the defendant was capable of contributing support for the couple's minor children, that it was equitable to impute income. The defendant's imputed income was a result of his salary while working his full time job because his own actions were the result of the loss of employment and destruction of their family.

In the event of divorce or separation, the best way to avoid having the courts to impute income is to stay employed in the same capacity throughout the child support hearing, make good faith efforts to pay the support and to have an agreement in place with the spouse. If there is an agreement reached between the two parties, the court will not have to impute income but simply enforce it. Any bad faith attempt by a parent to modify employment, as well as any missed payment, will result in the courts imputing income.