What is Imputed Income in North Carolina Child Support Cases?

North Carolina child support is calculated using various elements like the needs of the child and the custody arrangements, but income is one of the most significant factors in child support determinations. In most cases, the income each parent presently and actually earns is used to calculate support obligations.

However, imputed income is sometimes calculated in select cases. Imputing income occurs when the court uses earning potential to calculate support amounts. Most often, courts impute income when one parent is underemployed or underearning and acts in bad faith to avoid paying support.

Sternola v. Aljian

In the case of Sternola v. Aljian, Father appealed the trial court’s order requiring him to pay arrears of more than $32,000 due to calculations of imputed income.

Mother was a citizen of the United States, and Father was a dual citizen of the United States and the United Kingdom. The parties had three children, all of whom were born while the parties lived in the UK. After Father and Mother divorced, the Central Family Court of London entered an order allowing the parties’ oldest daughter, a teenager at the time, to move with Father to the US. The London Court later issued an order allowing the parties’ two other children to move to California with Father. Mother took custody of the two younger children and kept them with her in North Carolina against the court order. The London Court entered an order requiring her to return to the UK, and she appealed that order in the UK.

Mother also filed a complaint in North Carolina for child custody, later amending it to include child support. While Mother was living in North Carolina and Father was in California, Father was involuntarily terminated from his job, and he relocated to North Carolina to be closer to the children. The North Carolina court held a hearing on child support in October 2020 and, after nearly two years had passed, the court entered the order. Father owed over $32,000 in arrears to Wife. Father appealed.

He argued that the trial court used unsubstantiated evidence to impute his income. Additionally, Father stated that the trial court should not have imputed his income because he did not suppress his income in bad faith in order to avoid paying.

The appellate court found that the trial court did make a finding that was contradictory to Father’s evidence and for which the court had no supporting evidence. Courts in North Carolina can make such findings if they are not subject to reasonable dispute because they are generally known or are readily determined from indisputable sources. The appellate court determined that the lower court erred in making this contradictory decision regarding Father’s employment opportunities.

Because of this decision, the appellate court also vacated the lower court’s ruling regarding the imputed income amount, which led to arrears of over $32,000. North Carolina courts can only impute earning capacity for the purposes of child support if the paying parent disregarded their parental obligations, such as by purposefully depressing their income to a low amount. Father’s position with his employer was eliminated, and the loss of employment was through no fault of his own. After losing his job, he moved to North Carolina to be closer to his children and to learn new marketable skills for job searching. Further, he presented evidence that he had submitted numerous job applications. The appellate court determined that the trial court erred in imputing earning capacity to Father. The order was vacated and remanded.