Sometimes we don’t have good information about what a parent is earning. Sometimes, even if we have information – that doesn’t reflect reality very well. In those cases, the Rules say that we should impute income. Imputed Income is income that’s not actually earned by either parent. The Administrative Rules of Montana defines it in defined 37.62.106, ARM. It comes from the assumption that each parent is capable of working 40 hours per week unless there is evidence to the contrary. For a parent who can’t show a good reason for it, but is working less than 40 hours a week (or earning less than they should for that time) we can impute their income to an amount that better reflects what they should be doing.
There are 5 situations where it is appropriate to impute income, when the parent is: 1) unemployed; 2) underemployed; 3) fails to produce sufficient proof of income; 4) has an unknown employment status; or 5) is a student. Everyone knows what unemployment is. Underemployment is someone who is working, but not working as much as the Rules think they should. The part of this list that usually raises eyebrows is that we impute income to students. The reason for that is that for the rest of the world your income is a decent reflection of how much money you need to get by. But it’s not that way for students. Imputing income is about the only way to produce results that make sense when it comes to people still in school.
If it is appropriate to impute income, then the rules define what factors should be considered. Specifically, the things to consider are: 1) a parent’s recent work history; 2) the parent’s occupational and professional qualifications; and 3) existing job opportunities and associated earning levels in the community or the local trade area. This factors combine to tell us how much the parent could be earning if he was working (or working more hours).
Even if one of the parents is working, you can still impute income to that person. And the fact that the parent is earning a certain amount does not define the earning potential which can be imputed. So, if I’m a doctor, but working part time at a minimum wage job, the imputation can be based off of what I would make as a doctor and isn’t stuck only considering what I’m making scrubbing pots.
There are a number of scenarios where we can’t impute income. For example, if the reasonable and unreimbursed costs of child care for dependents in the parent’s household would offset in whole or in part that parent’s imputed income. Or, if a parent is physically or mentally disabled to the extend that the parent cannot earn income. Also, if unusual emotional and/or physical needs of a legal dependent require the parent’s presence in the home. Or if the parent has made diligent efforts to find and accept suitable work or to return to customary self-employment to no avail. And the final situation is if the court or hearing officer makes a finding that other circumstances exist which make the imputation of income inequitable. This last one is a catch all that gives Courts the authority to deal with edge cases and extreme situations.
Imputation of income is a tricky and complicated topic and this article really isn’t going to make you an expert. The best advice if you’re facing a situation where you may need to impute income it to talk to an attorney familiar with child support calculations. Once you know what to impute the other parent’s income at, you’ll be able to complete the financial information for your child support calculation.