Hidden Income and Imputed Income in New York

Income starts with the tax return, but does not stop there

For child support, Family Court Act § 413(1)(b)(5) starts with gross income as it should have been or should be reported on the most recent federal tax return. If a parent files jointly, the statute requires that parent to prepare a sworn form disclosing their individual gross income. Investment income, reduced by sums spent in connection with the investment, is also included to the extent it is not already counted.

Resources the court may attribute or impute

Under § 413(1)(b)(5)(iv), the court may, in its discretion, attribute or impute income from other resources available to a parent, including but not limited to:

• Non-income producing assets
• Meals, lodging, memberships, automobiles or other perquisites provided as part of compensation, to the extent they are personal expenditures or confer personal economic benefits
• Fringe benefits provided as part of compensation
• Money, goods or services provided by relatives and friends

In deciding how much to impute, the statute directs the court to consider the parent's specific circumstances, such as assets, residence, employment and earning history, job skills, education, literacy, age, health, criminal record and other employment barriers, record of seeking work, the local job market, the availability of employers willing to hire the parent, prevailing local earnings, and the age, number, needs and care of the children.

A parent who cuts income to lower support

Section 413(1)(b)(5)(v) allows the court to impute income based on a parent's former resources or income if it determines the parent reduced resources or income in order to reduce or avoid the support obligation. The statute provides that incarceration shall not be considered voluntary unemployment.

A related rule appears in modification cases: for the fifteen percent income change ground in Family Court Act § 451(3)(b), a reduction in income is not a ground for modification unless it was involuntary and the parent made diligent attempts to find work matching their education, ability and experience.

Getting the information

• Mandatory disclosure. Family Court Act § 424-a requires both parties to file a sworn statement of net worth and provide pay stubs and recent tax returns with W-2s. Form 4-17 asks self-employed parents to attach their returns with all schedules.
• Subpoenas. Family Court Act § 153 authorizes the court to issue subpoenas, including subpoenas for documents. Ask the clerk how to request one.