“Help! I am seeking child and spousal support, but my ex-partner has unreported income”. In family law cases involving child or spousal support, this is a common problem: figuring out how much someone actually earns isn’t always as simple as reading their tax return. This is especially true if the person is self-employed or receives income in non-traditional ways. When a court believes someone’s reported income isn’t an accurate reflection of what they truly earn, it can “impute” income to them — in other words, assign a higher income than what they claim.
Why Would Income Be Imputed?
There are several reasons a court may impute income, including:
- A person is under-employed on purpose.
- They haven’t shared required financial information.
- They’re deducting unreasonable expenses from business income.
- Their lifestyle doesn’t match their claimed earnings.
- They get a portion of their income from sources like stocks and dividends that are taxed lower than employment or business income.
For example, if a self-employed person reports only $10,000 in income after deducting $65,000 in “supplies” from $75,000 in revenue, the court may ask: Why not just work for a company at a stable wage? This could lead the court to believe that either income is understated, or deductions are inflated.
How Courts Detect Unreported Income
Courts don’t just look at income tax filings. They compare expenses to earnings, examine spending habits, and look at monthly bills. If someone spends more than they earn—without taking on debt—it can signal hidden income. Cash-heavy jobs, like working as a bartender, mechanic or hairdresser, are also more likely to raise red flags.
Missing Information and the Law
If someone doesn’t provide financial documents when legally required, the court may draw a negative conclusion. It might then estimate income based on lifestyle, past earnings, or even the other party’s tax return, especially if there was income-splitting in the past.
What This Means for You
For spouses that are seeking to receive child or spousal support, it’s important to weigh whether pursuing additional income is worth the legal costs. A $5,000 increase in imputed income may only change monthly child support by around $84.
For spouses that are being asked to pay child or spousal support, being upfront and providing reasonable expense justifications can go a long way. Courts appreciate honesty and transparency—and will often penalize those who try to hide the truth.
In short, honesty and full financial disclosure are key. If you’re unsure how this could affect your case, speaking with a family law professional can help clarify your rights and responsibilities.
How HCLS can Help You
At HCLS, we understand how confusing and stressful income imputation issues can be, especially when you’re already facing the challenges of a family law matter. Our team is experienced in identifying hidden income, analyzing financial documents, and advocating for fair and accurate support calculations. Whether you’re the payor or the recipient, we’ll guide you through every step with clear advice and practical solutions tailored to your situation. Let HCLS help you protect your rights and secure the outcome you deserve.
This blog post was authored by Matthew Patten, Student-at-law with HCLS.
