Imputed Income: When a North Carolina Court Assumes You Earn More

Child support

Support is normally based on what you earn. When a court finds bad faith, it is based on what you could earn instead.

On this page

1. What imputation means
2. What the court looks at
3. Self-employment disputes
4. If it is happening to you

What imputation means

Ordinarily child support is calculated on what a parent actually earns. Imputation is the exception: where a parent is voluntarily unemployed or underemployed in bad faith — suppressing income to avoid or reduce support — the court can calculate support on earning capacity instead of actual earnings.

The key phrase is bad faith. Losing a job is not bad faith. Taking a lower-paying job for legitimate reasons is not bad faith. Deliberately reducing income to affect the support obligation is.

Where courts tend to land

What the court looks at

Evidence that drives an imputation argument

A relative view of what tends to matter. Bad faith is a factual finding made on the whole record.

Self-employment is where this gets fought

For a self-employed parent, gross income means gross receipts minus ordinary and necessary business expenses. The dispute is almost always about which expenses are ordinary and necessary. Personal expenses paid through a business, aggressive depreciation, and a vehicle used mostly for personal driving are the recurring flashpoints.

If you are self-employed, the fix is boring and effective: clean books, a genuine separation between business and personal spending, and returns that match your bank deposits.

If income is being imputed to you

• Document the job search: applications, dates, responses.
• Document the reason for the change: layoff notice, medical records, business records.
• Show the timeline. A change that predates the support case is far easier to defend.
• Do not wait. File to modify promptly; support accrues at the old rate until you do.

Courts are not naive about timing. A job change three weeks after a support motion is filed will be examined closely.Christopher Adkins, Adkins Law

Frequently asked questions

Can a court base support on income I do not earn?

Yes, where it finds a parent is voluntarily unemployed or underemployed in bad faith. Support is then calculated on earning capacity.

Is losing my job bad faith?

No. An involuntary job loss with a genuine job search is not bad faith, but you must move to modify promptly.

How is income calculated for the self-employed?

Gross receipts minus ordinary and necessary business expenses. Personal expenses run through a business are commonly added back.

What if I took a lower-paying job for good reasons?

Document the reasons and the timeline. A legitimate, documented change made before the support dispute is defensible.

Timing and documentation decide these cases

Whether you are facing imputation or arguing for it, the outcome turns on records and dates. Adkins Law can tell you what your record actually shows.

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Adkins Law, PLLC · 9620 Sherrill Estates Road, Huntersville, NC 28078 · Calling or texting does not create an attorney–client relationship.

Keep reading

• Child support
• Alimony
• How a family case works
• FAQ

About the author: Christopher Adkins

Chris Adkins is the founder of Adkins Law, PLLC in Huntersville, North Carolina, a certified mediator with the North Carolina Dispute Resolution Commission, a parenting coordinator, and the author of The Book on Divorce in North Carolina. He previously served six and a half years as a Charlotte-Mecklenburg police officer and served as a Combat Engineer officer in the North Carolina Army National Guard and U.S. Army Reserve, deploying to Kuwait in 2012–2013.

Read the full profile · Request a consultation · (704) 274-5677

This page provides general information about North Carolina law for educational purposes. It is not legal advice and does not create an attorney–client relationship. Statutes, court rules and local practice change, and the outcome of any case depends on its own facts. Speak with a licensed North Carolina attorney about your situation. Written by Christopher Adkins, attorney at Adkins Law, PLLC, Huntersville, North Carolina.