Navigating Imputed Income in Child Support

Introduction to Imputed Income

Imputed income is when a court decides a parent should pay child support based on what they could be earning, not just what they’re actually making. For example, if a parent quits their job or takes a lower-paying job on purpose to avoid paying child support, the court can ‘impute’ or assign them a higher income based on their skills and work history to ensure the child gets fair support. Courts aim to protect children by preventing parents from manipulating their income to dodge child support obligations.

Challenges of Separation and Child Support

Divorce or separation is often an emotionally and financially challenging process. When children are involved, the complexity increases, as parents must navigate co-parenting and financial responsibilities. Child support disputes can escalate when one parent attempts to evade their obligations, leading to tension and legal battles. The non-custodial parent, who does not have primary custody, remains responsible for supporting their child financially, which can sometimes lead to contentious behavior, such as withholding support out of spite.

North Carolina Law and Child Support

In North Carolina, child support calculations primarily focus on the non-custodial parent’s income, as the child typically resides with the custodial parent. Some non-custodial parents may attempt to avoid child support by deliberately losing employment, falsifying timesheets to report fewer hours, or refusing to seek work. To address this, North Carolina Family Law § 50-13.4(c) allows courts to base child support on a parent’s earning capacity or potential income, rather than actual income, if the parent is voluntarily unemployed or underemployed. Ideally, parents should reach a mutual agreement on child support to avoid court intervention. If no agreement is reached, the court will determine the appropriate amount based on state guidelines and the parent’s financial circumstances.

When Courts Impute Income

Courts impute income only when there is evidence of bad faith, meaning the non-custodial parent deliberately suppressed their income to avoid child support. Bad faith might include quitting a job without cause, underreporting income, or refusing to seek employment. For example, in State v. Williams, 179 N.C. App. 838 (2006), the court overturned an imputed income ruling because it was based on the father’s income from 18 months prior to the hearing, and there was no evidence of deliberate income suppression. This case highlights that imputing income requires a finding of bad faith and must reflect the parent’s current earning capacity.

Potential Errors in Imputing Income

Imputing income can be complex, and errors may occur if courts misinterpret a parent’s financial situation. For instance, if a parent is self-employed and reports a business loss, the court must carefully consider this when calculating gross income. Imputing income is distinct from totaling actual income, as it focuses on earning potential rather than reported earnings. In Burnett v. Wheeler, 128 N.C. App. 174 (1998), the court erred by totaling the defendant’s income instead of imputing it, as there was no finding of bad faith or intentional income suppression. The court also failed to calculate the defendant’s earning capacity, leading to a ruling that was not based on imputed income principles. Such errors underscore the importance of precise evidence and legal analysis in child support cases.

Proving Bad Faith

To impute income, courts must find that a parent knowingly disregarded their child support obligations or engaged in actions that intentionally reduced their income. In Metz v. Metz, 711 S.E.2d 737 (2011), the court imputed income to a defendant who lost his job due to voluntary, unreasonable behavior that also harmed his children. The court determined that the defendant’s actions justified imputing income based on his previous salary, as he was capable of contributing to child support but failed to do so due to his own conduct. This case illustrates that courts may impute income when a parent’s deliberate actions undermine their ability to provide support.

Avoiding Imputed Income

To avoid having income imputed, non-custodial parents should maintain consistent employment at their earning capacity, make good-faith efforts to meet child support obligations, and, if possible, reach a formal agreement with the custodial parent. A mutually agreed-upon child support plan, documented and approved by the court, can prevent the need for imputation. Any attempt to manipulate employment status or miss payments may lead to a finding of bad faith, prompting the court to impute income. Open communication and transparency with the court and the other parent can help ensure a fair and equitable child support arrangement.

Conclusion

Navigating imputed income in child support cases requires understanding the legal principles and potential pitfalls. Courts in North Carolina aim to protect children by ensuring that parents meet their financial responsibilities, even when attempts are made to avoid them. By maintaining employment, acting in good faith, and seeking agreements with the other parent, non-custodial parents can avoid the complexities of imputed income and contribute to their child’s well-being effectively.

For those facing complex child support disputes, hiring a skilled family law attorney at Dummit Fradin can provide the confidence and expertise needed to achieve a fair outcome, ensuring your rights and your child’s best interests are protected.