One common contested issue in domestic cases is child support and child support modification. There are separate statutes in Indiana that govern each1. When determining child support, a general yet complex formula is used in order to fairly divide the income between parties in multiple financial situations.
As previously discussed in other blog posts, information included in the child support calculations includes gross weekly income, credit for overnight parenting time, health insurance premiums and other children, prior or subsequent born.
These variables and ultimate calculation determine support to be paid, which is, generally, the amount the child would have received/enjoyed from the party had the parents never divorced. Therefore, gross weekly income is an important variable in these calculations, and is often one of the contested issues in determining child support.
But what does a parent do when they are demoted or laid off? It is noteworthy that the child support calculations allow for imputation (assigning/assessing potential income to the party even if they do not actually earn it) of income to a party who is unemployed or underemployed.
For example, if a person earning $100,000 per year at a job requiring special education or skills suddenly quits the job for no reason and starts working a minimum wage service job at $290 per week, income will likely be imputed to that party at a higher level than minimum wage.
However, there are boundaries for imputing income. It is a case-by-case decision by the trial court. In a recent Court of Appeals case, the Court reviewed a decision not to impute income to Mother, who Father argued was essentially under underemployed2.
Mother had a job paying approximately $80,000 per year, but her job was reassigned to her assistant for approximately $32,000 per year. Mother could continue to work for her employer at a comparable salary, but in a different position involving relocation out of state and travel for approximately 75% of the time.
The Court held that imputing income is used to discourage parents from avoiding paying support by voluntarily being unemployed or underemployed, but that the child support guidelines do not require parents to make career decisions strictly based on the size of paychecks. Mother had started her own company and was earning money, and the Court remanded (sent back) the case to the trial court only to determine what Mother’s actual gross weekly income was. No imputed income addition was deemed necessary.
Employment decisions and changes can be a difficult and contentious subject in divorce and child support litigation. However, there are boundaries to imputing income, and parents are not bound to take jobs that pay more just to keep child support checks higher. While certainly parties should seek employment that can best support themselves and their families, there is still leeway to choose the job that is right for the parent and family.
We hope that this blog post has been informative about the prospect of a job change and the potential of imputed income and its limitations. Ciyou & Dixon, P.C. practices law throughout the state of Indiana. This post was written by attorney, Jessica Keyes.