Calculating Indiana Child Support - Imputing Income

Let us thank a Hamilton County judge for inspiring this post. At a hearing last month, I was asked whether or not the federal minimum wage was to be used when imputing a child support order. Mother had no particular job skills. The judge asked if my argument applied to a housewife. The question struck me as peculiar. Never has a judge ever asked that question. I thought maybe it was a peculiarity of Hamilton County or Noblesville.

Neither Indiana Child Support Guideline 3 nor it s commentary specifies what to use as a basis for the imputation.

Commentary to Guideline 3A

d. Imputing Income. Whether or not income should be imputed to a parent whose living expenses have been substantially reduced due to financial resources other than the parent's own earning capabilities is also a fact‑sensitive situation requiring careful consideration of the evidence in each case. It may be inappropriate to include as gross income occasional gifts received. However, regular and continuing payments made by a family member, subsequent spouse, roommate or live‑in friend that reduce the parent's costs for rent, utilities, or groceries, may be the basis for imputing income. The marriage of a parent to a spouse with sufficient affluence to obviate the necessity for the parent to work may give rise to a situation where either potential income or imputed income or both should be considered in arriving at gross income.

Lambert v. Lambert, 839 NE 2d 708 - Ind: Court of Appeals 2005 outlines the case law up to 2005 (and which was not disturbed by the Indiana Supreme Court when it took transfer of this case).

In a typical case, the Child Support Guidelines provide that if a parent is voluntarily underemployed, the trial court must calculate child support by determining the parent's potential income. Ind. Child Support Guideline 3(A)(3). Potential income is to be determined upon the basis of "employment potential and probable earnings level based on the obligor's work history, occupational qualifications, prevailing job opportunities, and earnings levels in the community." Id. The purposes for including potential income are to "discourage a parent from taking a lower paying job to avoid the payment of significant support" and to "fairly allocate the support obligation when one parent remarries and, because of the income of the new spouse, chooses not to be employed." Child Supp. G. 3, cmt. 2c. The trial court enjoys broad discretion to impute income to a parent so that the parent cannot evade a support obligation. Glover v. Torrence, 723 N.E.2d 924, 936 (Ind.Ct.App.2000). However, we also recognize that there are circumstances in which a parent is unemployed or underemployed for a legitimate purpose other than avoiding child support and in those circumstances, there are no grounds for imputing income. See Abouhalkah v. Sharps, 795 N.E.2d 488, 491 (Ind.Ct.App.2003) (holding that trial court erred in imputing income to a father who had left his job and was now earning less because "[a] parent who chooses to leave his employment rather than move hundreds of miles away from his children is not voluntarily unemployed or underemployed. Instead, he is a loving parent attempting to do the right thing for his children.").

Minimum wage has the benefit of being easily determined and calculated, but I do recall any case where there was any other item that could be used for imputing income. Thomas v. Orlando, 834 NE 2d 1055 - Ind: Court of Appeals 2005 discusses some cases where different bases were used for imputing income:

The trial court imputed minimum wage to Jessica but also concluded that the "fact that she was living at home and had help from family members to meet her day to day needs is not imputable to her as income." Appellant's App. p. 11. Jessica points to our decision in Terpstra v. Terpstra, 588 N.E.2d 592 (Ind.Ct.App.1992), as an example of the way in which we apply this Guideline. In Terpstra, we agreed with the trial court, which declined to include the father's company vehicle as imputed income. In so doing, we noted that "whether to include this amount in the weekly gross income is a matter for the trial court's discretion .... Viewing all the evidence before it, the trial court decided not to impute additional income to Father for his business automobile. We do not find this decision to be an abuse of discretion here." Id. at 595-96.

Robert, in contrast, points to our Supreme Court's decision in Glass v. Oeder, 716 N.E.2d 413 (Ind.1999), as support for his position. In Glass, our Supreme Court affirmed the trial court's order, which included the father's rent-free living arrangement as imputed income. The court noted that the father's "rent-free living arrangement provides him with a lower living cost that presumably frees up money for the support of his children and was a proper basis for the trial court to impute income." Id. at 417. In addition to his living arrangement, the father owned a corporation and received over $40,000 per year as income from that corporation.