Accountant calculating Income

Calculating Income If a Parent Is Voluntarily Underemployed

Law Office of Lori Crystal, LLC Dec. 28, 2022

Divorce in Colorado is no fault. The only real requirement is that you must have resided in the state for at least 91 days before filing papers for the dissolution of your marriage. The only ground that can be cited is that your marriage is “irretrievably broken.” You don’t even have to prove there was a separation involved. 

Colorado’s no-fault divorce laws mean that judges won’t consider either spouse’s misconduct or fault in deciding whether to grant the divorce, how to divide the marital property, or whether to award spousal support (alimony). When it comes to child custody, visitation, and support issues, the state does have guidelines but they do not cover misconduct or fault unless child abuse or neglect is involved. 

As a general rule, the parent who ends up spending the most nights with the child is the one who is awarded child support. The state provides worksheets so that a divorcing couple can preview what their child support obligations and breakdown might be. 

A problem can arise, however, if one spouse deliberately misstates his or her income or withholds sources of income so as to reduce their liability. What to do in this situation? If you feel you’re being cheated out of vital support, you can seek redress through the court system. The courts are allowed to calculate what is called imputed income, or potential income, which can rectify a situation of underreporting, understating, or even voluntary unemployment. 

If you feel that your spouse is deliberately understating his or her income in order to avoid paying their fair share of child support, and you’re located in or around Castle Rock, Colorado, contact us at the Law Office of Lori Crystal, LLC.  

For more than 30 years, we have been helping resolve family law issues so that everyone can move forward in their lives with a fresh perspective and a new start. We also proudly serve clients in Parker, Lone Tree, Highland Ranch, Larkspur, Castle Pines, Franktown, Elizabeth, Kiowa, and Centennial. 

How Is Child Support Decided in Colorado? 

Colorado relies on what is known as the “income shares” method of calculating child support. This method is based on the premise that the child or children are entitled to a share of each parent’s income and their lifestyle after divorce should resemble what they enjoyed prior to divorce as much as possible. 

The courts will therefore consider several factors, which include but may not be limited to: 

  • The gross income of both spouses 

  • Any income the child may receive 

  • How many overnight stays the child spends with each parent 

  • Expenses including medical, daycare, and educational 

  • The presence of other child or spousal support obligations from a previous marriage 

To calculate the income of each parent, the courts will look at various sources including but not limited to salaries, wages, and tips; commissions; bonuses or dividends; severance pay; trust income; and Social Security or unemployment benefits. 

As for deciding custody issues, Colorado courts will use the almost universal standard of “what’s in the child’s best interest.” Here, an older child’s preferences may even be calculated in. Certainly, if there are issues of domestic violence or child or spousal abuse, this will be a major factor. 

To help divorcing spouses estimate child support obligations, the state offers two worksheets. One is for a spouse who has sole physical custody, and the other is for shared custody. The forms are based on income, expenses, obligations toward child support, adjustments for low income, healthcare contributions, and more.  

In short, these forms are not that easy or straightforward and may involve some research. They also certainly allow for answers that may understate income and overstate allowances. 

What If a Parent Is Voluntarily Unemployed or Underemployed? 

One spouse may decide to work less, move into a lower-paying position, or even quit working (faking a termination or citing another cause) to lower or even eliminate his or her obligation. 

However, Colorado statutes state: “If a parent is voluntarily unemployed or underemployed, child support must be calculated based on a determination of potential income...” 

So, even if you hope to avoid support payments by feigning or actually becoming underemployed or unemployed, the courts can still order you to pay a certain amount based on what is often termed “imputed income.” Courts generally rely on imputing income only when it is clear that one parent is trying to game the system. It will not be employed in cases of true unemployment or underemployment. 

The factors the courts will use in imputing income start with previous income levels, generally from the most recent job. The courts may also consider the individual’s ability to work and will analyze that parent’s earning potential based on education, work experience, location, and other factors. Then, the judge will issue a child support order based on the imputed income, regardless of the parent’s actual income. 

What If a Parent Loses a Job or Income After a Child Support Order? 

Another possibility is that one or the other parent may lose a job or source of income after the child support order has been issued. In general terms, child support will continue until the child turns 18 (19 if still in high school) or the recipient parent remarries.  

If the payment structure needs to be readjusted because of other factors, such as losing a job or earning less, then the only way to rebalance the payment structure is by going back to the court and seeking a modification. 

Turn to Experienced Legal Representation 

Of course, even child custody and support issues can be resolved outside of the courtroom if both parents can reach a divorce agreement regarding these and other matters. The family law judge will need to review your “non-contested” agreement, but if it is balanced and fair for all parties and adheres to state guidelines, it will likely be approved. This can save both time and legal expenses, provided both parents can resolve matters amicably. 

If you are considering or undergoing a divorce in or around Castle Rock, Colorado, and face issues regarding income falsifying or voluntary underemployment or unemployment, contact us at the Law Office of Lori Crystal, LLC. We will help you navigate the system and fight for the results you’re seeking.