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Calculating Imputed Income and What That May Mean for You

Imputed income refers to a form of compensation given by your employer. This compensation is non-monetary. It may be in the form of a gym membership, company car, discounts, and financial assistance, among many others. But did you know that imputed income is also used differently in another context? “Imputed income” is also used in a divorce proceeding, or in determining child support. But what does this mean in that context then?

Imputed Income

In the context of a divorce proceeding or in the determining of child support, imputed income takes a different meaning. In this context, imputed income is when the judge assigns the amount. It is because one spouse earns a rather small amount of money. Perhaps on a minimum wage. A spouse’s actual income might not be appropriate to use when settling child support.

Calculating Imputed Income

When calculating child support, the non-custodial parent’s financial standing is a reference to determine how much they have to pay. When it comes to imputed income, it is more or less the same.

These are the factors usually considered:

  • Financial standing, how much the parent is earning and how much they could actually be earning given their capabilities
  • Educational background
  • Capacity to be able to work
  • How much they earned in their past employments.

Another important factor when calculating imputed income is if the non-custodial parent was unemployed voluntarily or not. It is possible that he or she had no choice in their unemployment. These calculations are done under the assumption that the parent is at least capable of earning minimum wage. All these factors can either make the child support payments of the non-custodial parent increase or decrease. It depends on their overall financial and employment situation.

It may be a little unfair if the parent who cannot afford to pay for support find themselves struggling financially. They may also even struggle in finding employment in the first place. In order to mitigate this, a parent may be assigned an imputed income. This will help fairly determine the amount a non-custodial parent has to provide in child support. This way, they can still pay child support to the best of their capacities.

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Mr. Hutton is a Divorce and Custody Lawyer based out of Round Rock, TX. His background is with child psychology at Arizona State University where he received a B.S. in 2006, and he continued this by working with the Children’s Right’s Clinic at the University of Texas School of Law where he received his J.D. in 2009. Throughout his practice, he has been a strong proponent of utilizing modern technology to improve his practice and the representation of his clients. He currently is the technology chair of CAFA of Travis County and is committed to improving and modernizing the practice of law in Texas. If you have any questions you can contact him at timothy.hutton@austintexaslegal.com

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