Imputed Income for Child Support in Utah
The law is clear that parents have an ongoing obligation to financially support their minor children. Although most parents have no problem with this duty of support, some parents resist what they consider to be excessive child support orders and may intentionally reduce income to lower their support payments.
The law has specific rules for situations where paying parents reduce their earnings without good cause. In Utah, the courts may add back into the child support calculation the income that the paying parent claims to have lost. This concept is known as “imputing income.”
This article addresses how Utah courts impute income when the paying parent is falsely lowering her or his earnings. If you have questions after reading this article, you should contact an experienced family law attorney in your area.
Establishing a Child Support Order
Utah law states specifically that children are entitled to share in the current incomes of both parents. State law uses a formula to determine how much child support should be paid by one parent to the other parent. For more detailed information about the child support law in Utah.
The Meaning of Imputed Income
If a judge rules that the parent who is responsible for paying child support (the paying parent) has intentionally lowered his or her earnings, the court can attribute additional income toward the paying parent in order to establish a fair child support order – one that will provide sufficient financial support to the child. This is called “imputing income.”
Courts won’t impute income when there is good cause for a reduction in support. However, when judges find that a parent has voluntarily reduced income, then the paying parent will likely be ordered to pay support based on his or her earning capacity.
Some parents may think their child support payment is too high or feel that they should not have to pay any child support at all. They may try to find ways to avoid their obligation to their children. Some paying parents may decide to quit a job, refuse to find replacement work, and then ask the court to reduce their child support payment. In Utah, if a court determines that the paying parent lost a job deliberately, he or she will be considered voluntarily unemployed, and the judge will not reduce the child support order.
The term “underemployment” means that the paying parent has intentionally taken a lower paying job or hides income to lessen the child support order. In other words, the paying parent is working below his or her full earning potential.
A paying parent may be underemployed when he or she is no longer working in an occupation for which she or he has been trained and is working at a lower paying job. For example, a registered nurse may decide to leave a lucrative hospital job and take a minimum wage job in a daycare. The court could rule that the nurse is underemployed and should be earning more money.
The paying parent doesn’t necessarily have to be deliberate in trying to lose or lower income. Utah law holds that if the paying parent’s loss of earnings is due to neglect, income can be imputed.
A court could also find a paying parent to be underemployed if the paying parent defers taking sales commissions or bonuses. For example, right before a scheduled child support hearing, the paying parent defers taking a year-end bonus by asking his or her employer to pay the bonus at a later time. The intention is to keep the bonus hidden, so it’s not used to calculate child support. If it’s proven that this was the paying parent’s ploy, the judge may impute or add the bonus back into the calculation.
How Courts Calculate Imputed Income
In child support cases, Utah law requires that both parents provide their most recent income tax returns and written proof of their current and past earnings. The judge has this information available for reference to see what the paying parent was earning in the past and base child support on that amount, rather than the artificially reduced amount of income.
When the paying parent has no significant work history or fails to provide his or her income history, the judge may refer to the most recently published Utah Occupational Employment Wage Survey. The judge will draw on this information to establish what the paying parent’s imputed income should be.
Utah law has special statutes that focus on business owners who may try to use the business to hide income. If the business owner is lending the business money to minimize his or her earnings, the loan interest should be at the going market rate. Otherwise, the loan amount could be counted as income for child support calculation purposes.
When Imputing Income is not Allowed
There are some cases where courts are prohibited from imputing income. If the paying parent becomes physically or mentally disabled or has had employment losses due to Hurricanes Katrina or Rita, the court cannot find that the paying parent is voluntarily unemployed or underemployed.
In addition if one parent is caring for the parties’ child who is under five years of age, the court will not attribute income to that parent.
Free Consultation with a Child Support Lawyer in Utah
If you have a question about child support or if you need to collect back child support, please call Ascent Law at (801) 676-5506. We will help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506